<PAGE> 1
File No. 811-3886
As filed on December 30, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 33 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 34 X
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AIM ADVISOR FUNDS, INC. (formerly, INVESCO Advisor Funds, Inc.)
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, Texas 77046
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, Texas 77046
(Name and Address of Agent for Service)
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Copies to:
Ofelia M. Mayo, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
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Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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X on March 3, 1998, pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of rule 485.
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If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Common Stock
<PAGE> 2
AIM ADVISOR FUNDS, INC.
CROSS REFERENCE SHEET
REQUIRED BY RULE 495
UNDER THE SECURITIES ACT OF 1933
The enclosed Prospectus, Statement of Additional Information, and
Part C relate to AIM Advisor Funds, Inc. (the "Registrant"), an investment
company currently consisting of five separate series (the "Funds").
PART A
Information Required in Prospectus
<TABLE>
<CAPTION>
N-1A Item Number Prospectus Location
- ---------------- --------------------
<S> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Table of Fees and Expenses
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description of Cover Page; Summary; About the Funds; Investment
Registrant Programs; Investment Restrictions; Additional Risk
Factors and Policies Relevant to the Funds
Item 5. Management of the Fund Summary; Management; Investment Programs; Miscellaneous
Item 5A. Management's Discussion Performance Information
of Fund Performance
Item 6. Capital Stock and Other Capitalization; Dividends, Distributions
Securities and Tax Matters; Miscellaneous
Item 7. Purchase of Securities How to Purchase Shares; Distribution
Being Offered Plan; Terms and Conditions of Purchase of
the AIM Funds; Determination of Net Asset Value
Item 8. Redemption or Repurchase How to Redeem Shares; Special Plans
Item 9. Pending Legal Proceedings [Not applicable]
</TABLE>
<PAGE> 3
PART B
Information Required in Statement of Additional Information
<TABLE>
<CAPTION>
Statement of Additional
N-1A Item Number Information Location
- ---------------- ------------------------
<S> <C>
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Introduction; General Information About
History the Company
Item 13. Investment Objectives and Investment Objectives and
Policies Policies; Portfolio Securities
Loans; Investment Restrictions
Item 14. Management of the Fund Management of the Company
Item 15. Control Persons and Miscellaneous - Principal
Principal Holders of Shareholders
Securities
Item 16. Investment Advisory and The Advisory and Sub-Advisory
Other Services Agreements; Operating Services
Agreement; The Distributor; Distribution
of Shares; Miscellaneous - The
Custodian; Miscellaneous - Independent
Accountants
Item 17. Brokerage Allocation and Brokerage and Portfolio
Other Practices Transactions
Item 18. Capital Stock and Other General Information About the Company
Securities
Item 19. Purchase, Redemption and Prospectus - How to Purchase Shares;
Pricing of Securities Prospectus - How to Redeem
Being Offered Shares; Prospectus - Determination
of Net Asset Value; Distribution of
Shares; Miscellaneous - Computation of
Net Asset Value
Item 20. Tax Status Distributions and Tax Information
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Information
Performance Data
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 5
[APPLICATION INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP VALUE FUND
AIM ADVISOR MULTIFLEX FUND
AIM ADVISOR REAL ESTATE FUND
(SERIES PORTFOLIOS OF AIM ADVISOR FUNDS, INC.)
PROSPECTUS
MARCH 3, 1998
This Prospectus contains information about the five mutual funds listed above
(the "Funds") which are separate series portfolios of AIM Advisor Funds, Inc.
(the "Company"), a Maryland corporation. Each Fund's investment objective is to
achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations. Each of the
Funds has separate investment policies.
This Prospectus sets forth basic information about the Funds that prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated March 3, 1998,
has been filed with the United States Securities and Exchange Commission ("SEC")
and is incorporated herein by reference. The Statement of Additional Information
is available without charge upon written request to the Company at P.O. Box
4739, Houston, Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains
a Web site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Company. Additional information about the Funds may also be obtained on the
Web at http://www.aimfunds.com.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 6
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUNDS................................ 5 FUNDS--Registered Trademark-- .........
Table of Fees and Expenses............. 5 Introduction to The AIM Family of
Financial Highlights................... 7 Funds............................... A-1
About the Funds........................ 12 How to Purchase Shares................. A-1
Investment Programs.................... 12 Terms and Conditions of Purchase of the
Additional Risk Factors and Policies AIM Funds........................... A-2
Relevant to the Funds............... 16 Special Plans.......................... A-9
Investment Restrictions................ 21 Exchange Privilege..................... A-11
Management............................. 21 How to Redeem Shares................... A-13
Capitalization......................... 26 Determination of Net Asset Value....... A-17
Shareholder Reports.................... 26 Dividends, Distributions and Tax
Performance Information................ 26 Matters............................. A-18
Miscellaneous.......................... 27 General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
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THE FUNDS. AIM Advisor Funds, Inc., is a Maryland corporation organized as an
open-end, diversified management investment company. Currently the Company
offers Class A, Class B and Class C shares of AIM ADVISOR FLEX FUND ("Flex
Fund"), AIM ADVISOR INTERNATIONAL VALUE FUND ("International Value Fund"), AIM
ADVISOR LARGE CAP VALUE FUND ("Large Cap Value Fund"), AIM ADVISOR MULTIFLEX
FUND ("MultiFlex Fund") and AIM ADVISOR REAL ESTATE FUND ("Real Estate Fund"),
(collectively, the "Funds"). This Prospectus relates to all of such Funds.
INVESTMENT OBJECTIVES. The investment objective of each Fund is to achieve a
high total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. Each of the Funds has
separate investment policies. See "Investment Programs."
MANAGEMENT. A I M Advisors, Inc. ("AIM" or "Advisor") serves as each Fund's
investment advisor pursuant to the Investment Advisory Agreement (the "Advisory
Agreement").
AIM, together with its subsidiaries, manages or advises over 50 investment
company portfolios encompassing a broad range of investment objectives. Under
the terms of the Advisory Agreement, AIM supervises all aspects of each Fund's
operations and provides investment advisory services to each Fund. As
compensation for these services AIM receives a fee based on each Fund's average
daily net assets. Under an Operating Services Agreement, AIM is reimbursed by
each Fund for its costs of performing, or arranging for the performance of,
certain accounting, shareholder servicing, legal (except litigation), dividend
disbursing, transfer agent, registrar, custodial, shareholder reporting,
recordkeeping, and other administrative services for the Funds.
INVESCO Capital Management, Inc. ("ICM"), a Delaware corporation and the
sub-advisor for the LARGE CAP VALUE FUND and the FLEX FUND, acts as investment
adviser to other investment companies and furnishes investment counseling
services to private and institutional clients.
INVESCO Management & Research, Inc. ("IMR"), a Massachusetts corporation and
the sub-advisor for the MULTIFLEX FUND, acts as investment adviser to other
investment companies and manages primarily pension and endowment accounts.
INVESCO Realty Advisors, Inc. ("IRAI"), a Texas corporation and the
sub-advisor for the REAL ESTATE FUND, acts as investment adviser to corporate
plans and public pension funds as well as endowment and foundation accounts.
INVESCO Global Asset Management Limited ("IGAM"), a Bermuda corporation and
the sub-advisor for INTERNATIONAL VALUE FUND, acts as global investment advisor
to AMVESCAP PLC affiliated companies. See "Management."
MULTIPLE DISTRIBUTION SYSTEM. Each of the Funds offers three classes of
shares, Class A, Class B and Class C. The three classes have the following
features:
Class A Shares -- Class A shares are sold with an initial sales charge
of up to 5.50% of the offering price for all Funds (4.75% for the REAL
ESTATE FUND) and are subject to an ongoing service fee of 0.25% and an
ongoing distribution fee of 0.10% calculated at an annual rate on the
average daily net assets of the Fund's Class A shares. The initial sales
charge may be waived or reduced in certain circumstances. Shares purchased
pursuant to waiver of the initial sales charge are subject to a contingent
deferred sales charge ("CDSC") of 1.00% if redeemed prior to the shares
being invested in Class A shares of a Fund class subject to a 12b-1 fee
("12b-1 Fund") for a minimum of 18 months. See "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to an ongoing service fee of 0.25%
and an ongoing distribution fee of 0.75% calculated at an annual rate on
the average daily net assets of the Fund's Class B shares. Class B shares
are subject to a maximum CDSC of 5.00% on certain redemptions made within
six years of
2
<PAGE> 7
the date on which a purchase was made. Class B shares automatically convert
to Class A shares of the Fund eight years following the end of the calendar
month in which a purchase was made. Class B shares are subject to higher
expenses than Class A shares.
Class C Shares -- Class C shares do not incur an initial sales charge
when purchased but are subject to a CDSC of 1.00% if redeemed prior to
being invested in Class C shares of a 12b-1 Fund for a minimum of 12 full
months after purchase and are subject to an ongoing service fee of 0.25%
and an ongoing distribution fee calculated at an annual rate of 0.75% of
the average daily net assets of Class C shares of the Fund.
Certain minimum purchase requirements apply. The Funds reserve the right to
reduce or waive the minimum purchase requirements in certain cases. See "How to
Purchase Shares."
SUITABILITY FOR INVESTORS. The multiple class structure permits an investor to
choose the method of purchasing shares that is most beneficial given the amount
of the purchase, the length of time the shares are expected to be held, whether
dividends will be paid in cash or reinvested in additional shares of a Fund and
other circumstances. Investors should consider whether, during the anticipated
life of their investment in a Fund, the accumulated distribution fees and any
applicable CDSC on Class B shares prior to conversion or on Class C shares would
be less than the initial sales charge and accumulated distribution fees on Class
A shares purchased at the same time, and to what extent such differential would
be offset by the higher return on Class A shares. To assist investors in making
this determination, the table under the caption "Table of Fees and Expenses"
sets forth examples of the charges applicable to each class of shares. Class A
shares will normally be more beneficial than Class B and Class C shares to the
investor who qualifies for reduced initial sales charges, as described below.
A I M DISTRIBUTORS, INC. ("AIM Distributors") intends to reject any order for
purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. See "How
to Purchase Shares" and "Special Plans." The distributor of the Funds' shares is
AIM Distributors, P.O. Box 4739, Houston, Texas 77210-4739.
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Funds may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set
forth herein. See "Exchange Privilege -- Terms and Conditions of Exchanges" in
the Investor's Guide to this Prospectus.
REDEEMING SHARES. Shareholders can redeem their shares in a Fund any day the
New York Stock Exchange is open, either directly through the Fund's transfer
agent or through the shareholder's securities dealer of record. A Fund will only
redeem shares for which it has received payment. See "How to Redeem Shares."
Class A Shares -- Only shares purchased pursuant to a waiver of the
initial sales charge are subject to a CDSC of 1.00% if redeemed prior to
the shares being invested in the Class A shares of a 12b-1 Fund for a
minimum of 18 months. See "How to Redeem Shares -- Contingent Deferred
Sales Charge Program for Large Purchases."
Class B Shares -- Holders of Class B shares may redeem all or a
portion of their shares at net asset value on any business day, less a CDSC
for redemptions made within six years following the date at which a
purchase was made. Class B shares redeemed after six years following the
date of purchase will not be subject to any CDSC. See "How to Redeem
Shares -- Multiple Distribution System."
Class C Shares -- A CDSC of 1.00% is applicable to shares redeemed
prior to the shares purchased being invested in the Class C shares of a
12b-1 Fund for a minimum of 12 full months after purchase. There is no CDSC
applicable to redemptions of additional purchases of shares in any of the
Funds by shareholders of record on April 30, 1995. Shareholders whose
broker/dealers maintain a single omnibus account with A I M Fund Services,
Inc. (the "Transfer Agent") on behalf of those shareholders, perform
sub-accounting functions with respect to those shareholders, and are unable
to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to
a CDSC on all purchases made after March 1, 1996.
The CDSC is assessed on an amount equal to the lesser of the original purchase
price or the redemption price of the shares redeemed. The amount paid upon
redemption will be the net asset value per share next determined after the
redemption request is received in proper form, less the amount of any applicable
CDSC. See "How to Redeem Shares."
DISTRIBUTIONS. It is the intention of the LARGE CAP VALUE FUND, FLEX FUND,
MULTIFLEX FUND, REAL ESTATE FUND and INTERNATIONAL VALUE FUND to distribute to
shareholders of each of these Funds net investment income and net realized
capital gains, if any. The per share dividends and distributions on each class
of shares of a Fund will be reduced by expenses allocated to and borne by the
class, including service and distribution fees applicable to that class. It is
intended that the LARGE CAP VALUE FUND, FLEX FUND, MULTIFLEX FUND and REAL
ESTATE FUND will make periodic distributions of net investment income (including
any net short-term capital gains) quarterly, and will make an annual
distribution of any net realized long-term capital gain annually. It is intended
that the INTERNATIONAL VALUE FUND will make semiannual distributions of net
investment income and an annual distribution of any net realized long-term
capital gain annually. All such distributions will be reinvested automatically
in additional shares (or fractions thereof) of each applicable Fund pursuant to
such Fund's Automatic Dividend Investment Plan unless a shareholder has elected
not to participate
3
<PAGE> 8
in this plan or has elected to terminate his participation in the plan and to
receive his distributions in excess of ten dollars in cash. See "Dividends,
Distributions and Tax Matters" and "Special Plans -- Automatic Dividend
Investment Plan."
RISK FACTORS AND POLICIES. Certain of the Funds may engage in investment
techniques that involve risks described more fully under "Additional Risk
Factors and Policies Relevant to the Funds." For instance, all of the Funds, may
invest in securities of foreign issuers, which may be subject to additional risk
factors, including foreign currency and political risks, not applicable to
securities of U.S. issuers. The INTERNATIONAL VALUE FUND will invest primarily
in foreign securities. The MULTIFLEX FUND may invest in securities rated lower
than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's, a division of McGraw-Hill Companies, Inc. ("S&P") but rated at least Ba
by Moody's or BB by S&P at the time of purchase. Such securities carry a high
degree of credit risk and are considered speculative by the major rating
agencies. Each Fund may purchase or sell options on futures, write purchase and
sell puts and calls and enter into swap agreements. Each of these techniques
involves risk, as discussed more fully in the description of the techniques
under "Additional Risk Factors and Policies Relevant to the Funds."
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, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
4
<PAGE> 9
THE FUNDS
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TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly.
Except where noted, the fees and expenses set forth in the table are based on
the expenses of the Funds for the most recent fiscal year. The fees and expenses
for Class B shares set forth in the table are based on the estimated expenses
for the current fiscal year. The rules of the SEC require that the maximum sales
charge be reflected in the table even though certain investors may qualify for
reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
AIM ADVISOR
AIM ADVISOR INTERNATIONAL AIM ADVISOR
FLEX FUND VALUE FUND LARGE CAP VALUE FUND
---------------------- ---------------------- ----------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on
purchase of shares (as a %
of the offering price)...... 5.50% None None 5.50% None None 5.50% None None
Maximum sales load on
reinvested dividends........ None None None None None None None None None
Deferred sales load (as a % of
original purchase price or
redemption proceeds,
whichever is lower)......... None* 5.00% 1.00% None* 5.00% 1.00% None* 5.00% 1.00%
Redemption fees................ None None None None None None None None None
Exchange fee................... None None None None None None None None None
Annual Fund Operating Expenses
(as a % of average net assets)
Management fees................ 0.75% 0.75% 0.75% 1.00% 1.00% 1.00% 0.75% 0.75% 0.75%
Rule 12b-1 distribution plan
payments.................... 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00%
All other expenses(1).......... 0.44% 0.44% 0.44% 0.46% 0.46% 0.46% 0.45% 0.45% 0.45%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses............. 1.44% 2.19% 2.19% 1.71% 2.46% 2.46% 1.45% 2.20% 2.20%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR
MULTIFLEX FUND REAL ESTATE FUND
---------------------- ----------------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as
a % of the offering price)....................... 5.50% None None 4.75% None None
Maximum sales load on reinvested dividends.......... None None None None None None
Deferred sales load (as a % of original purchase
price or redemption proceeds, whichever is
lower)........................................... None* 5.00% 1.00% None* 5.00% 1.00%
Redemption fees..................................... None None None None None None
Exchange fee........................................ None None None None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees..................................... 1.00% 1.00% 1.00% 0.90% 0.90% 0.90%
Rule 12b-1 distribution plan payments............... 0.25%(2) 1.00% 1.00% 0.25%(2) 1.00% 1.00%
All other expenses(1)............................... 0.42% 0.42% 0.42% 0.46% 0.46% 0.46%
---- ---- ---- ---- ---- ----
Total fund operating expenses............... 1.67% 2.42% 2.42% 1.61% 2.36% 2.36%
==== ==== ==== ==== ==== ====
</TABLE>
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(1) AIM has voluntarily agreed to limit the Total Operating Expenses of the
Funds to assure that Fund expenses do not exceed the maximum amounts as
designated herein (See "Management"), subject to exceptions for brokerage
commissions, interest, taxes, litigation, directors fees and expenses and
other extraordinary expenses. The expense ceilings include reductions at
larger asset sizes to reflect anticipated economies of scale as the Funds
grow in size. See "Management."
(2) AIM has voluntarily agreed to limit the Class A shares Rule 12b-1
distribution plan payments to 0.25% for three years beginning August 4,
1997. If these limitations were not in effect, the 12b-1 distribution plan
payments and total operating expenses of the Class A shares would be as
follows: 0.35% and 1.54% for AIM ADVISOR FLEX FUND, 0.35% and 1.81% for AIM
ADVISOR INTERNATIONAL VALUE FUND, 0.35% and 1.55% for AIM ADVISOR LARGE CAP
VALUE FUND, 0.35% and 1.77% for AIM ADVISOR MULTIFLEX FUND and 0.35% and
1.71% for AIM ADVISOR REAL ESTATE FUND. See "Management" and
"Management -- Distribution Plan."
* Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months from the date such shares were purchased.
See the Investor's Guide, under the caption "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
5
<PAGE> 10
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EXAMPLES. You would pay the following expenses on a $1,000 investment in Class
A shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 69 $ 71 $ 69 $ 71 $ 63
3 years................................... 98 106 98 105 96
5 years................................... 129 143 130 141 131
10 years.................................. 218 246 219 242 230
</TABLE>
The above examples assume payment of a sales charge at the time of purchase;
actual expenses may vary for purchases of $1 million or more, which are made at
net asset value and are subject to a contingent deferred sales charge for 18
months from the date such shares were purchased.
You would pay the following expenses on a $1,000 investment in Class B shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $72 $75 $72 $75 $74
3 years................................... 99 107 99 105 104
</TABLE>
You would pay the following expenses on a $1,000 investment in Class B shares
of the Funds, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $22 $25 $22 $25 $24
3 years................................... 69 77 69 75 74
</TABLE>
You would pay the following expenses on a $1,000 investment in Class C shares
of the Funds, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 32 $ 35 $ 32 $ 35 $ 34
3 years................................... 69 77 69 75 74
5 years................................... 117 131 118 129 126
10 years.................................. 252 280 253 276 270
</TABLE>
You would pay the following expenses on the same $1,000 investment in Class C
shares, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
AIM ADVISOR AIM ADVISOR AIM ADVISOR
AIM ADVISOR INTERNATIONAL LARGE CAP AIM ADVISOR REAL ESTATE
FLEX FUND VALUE FUND VALUE FUND MULTIFLEX FUND FUND
----------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1 year.................................... $ 22 $ 25 $ 22 $ 25 $ 24
3 years................................... 69 77 69 75 74
5 years................................... 117 131 118 129 126
10 years.................................. 252 280 253 276 270
</TABLE>
As a result of 12b-1 distribution plan payments, a long-term shareholder of
the Funds may pay more than the economic equivalent of the maximum front-end
sales charges permitted by rules of the National Association of Securities
Dealers, Inc. Given the maximum front-end and contingent deferred sales charges
and the 12b-1 distribution plan payments applicable to Class A shares, Class B
shares and Class C shares of the Funds, it is estimated that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
The above examples should not be considered to be representative of the Funds'
actual or future expenses, which may be greater or less than those shown. In
addition, while the examples assume a 5% annual return, each Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
6
<PAGE> 11
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FINANCIAL HIGHLIGHTS
The following financial information for Class C shares for each of the Funds
for the five years ended December 31, 1997, 1996, 1995, 1994 and 1993, and the
financial information for Class A shares for each of the Funds for the period
ended December 31, 1997 have been audited by Price Waterhouse LLP, independent
accountants. This information should be read in conjunction with the audited
financial statements and the Report of Independent Accountants thereon appearing
in the Fund's 1997 Annual Report to Shareholders and the Statement of Additional
Information. All of these materials are available without charge by contacting
AIM Distributors, at the address or telephone number shown on the cover page of
this Prospectus. All per share data for the LARGE CAP VALUE FUND and the FLEX
FUND, formerly INVESCO Advisor Equity Portfolio and INVESCO Advisor Flex
Portfolio, respectively, has been adjusted to reflect a 25 share for 1 share
stock split which was effected on December 31, 1991 [; and all per share data
for the Class A and Class C shares of each of the Funds, has been adjusted to
reflect a 3 share for 1 share stock dividend which was effected on November 7,
1997]. Financial information is not presented for Class B as no Class B shares
were publicly issued as of December 31, 1997. The investment advisor to the
Funds changed on August 4, 1997.
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR LARGE CAP VALUE FUND (FORMERLY, INVESCO ADVISOR EQUITY PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -- beginning of
period............................. $ $ 70.41 $ 55.83 $ 59.61 $ 63.27 $ 63.38 $ 54.70
-------- -------- -------- ------- ------- ------- -------
Investment Operations:
Net investment income.............. 0.18 0.41 0.36 0.41 0.60 0.66
Net gains or losses on securities
(both realized and unrealized)... 11.90 16.44 1.26 5.40 2.44 17.63
-------- -------- -------- ------- ------- ------- -------
Total from investment operations... 12.08 16.85 1.62 5.81 3.04 18.29
-------- -------- -------- ------- ------- ------- -------
Distributions:
Dividends (from net investment
income).......................... (0.20) (0.41) (0.36) (0.41) (0.57) (0.69)
Distributions (from capital
gains)........................... 0.00 (1.86) (5.04) (9.06) (2.58) (8.92)
-------- -------- -------- ------- ------- ------- -------
Total Distributions................ (0.20) (2.27) (5.40) (9.47) (3.15) (9.61)
-------- -------- -------- ------- ------- ------- -------
Net asset value -- end of period.... $ $ 82.29 $ 70.41 $ 55.83 $ 59.61 $ 63.27 $ 63.38
======== ======== ======== ======= ======= ======= =======
Total return(a)..................... % 17.17% 30.28% 2.69% 9.16% 4.84% 33.59%
======== ======== ======== ======= ======= ======= =======
Ratios/Supplemental Data:
Net assets -- end of period (000
Omitted)......................... $ $137,416 $113,573 $77,929 $86,659 $91,146 $81,732
======== ======== ======== ======= ======= ======= =======
Ratio of expenses to average net
assets(b)........................ % 2.26% 2.28% 2.25% 2.25% 2.18% 2.22%
======== ======== ======== ======= ======= ======= =======
Ratio of net investment income to
average net assets(b)............ % 0.24% 0.64% 0.61% 0.62% 0.90% 1.04%
======== ======== ======== ======= ======= ======= =======
Portfolio turnover rate............ % 19% 17% 21% 47% 41% 47%
======== ======== ======== ======= ======= ======= =======
Average commission rate paid(c).... $ $ 0.0590 -- -- -- -- --
======== ======== ======== ======= ======= ======= =======
<CAPTION>
CLASS C CLASS A
--------------------------- --------------
YEAR ENDED DECEMBER 31,
--------------------------- [PERIOD] ENDED
1990 1989 1988 1997(d)
------- ------- ------- --------------
<S> <C> <C> <C> <C>
Net asset value -- beginning of
period............................. $ 62.01 $ 56.89 $ 54.16 $
------- ------- ------- --------------
Investment Operations:
Net investment income.............. 1.04 1.20 1.21
Net gains or losses on securities
(both realized and unrealized)... (3.40) 11.12 6.23
------- ------- ------- --------------
Total from investment operations... (2.36) 12.32 7.44
------- ------- ------- --------------
Distributions:
Dividends (from net investment
income).......................... (1.21) (1.26) (1.24)
Distributions (from capital
gains)........................... (3.74) (5.94) (3.47)
------- ------- ------- --------------
Total Distributions................ (4.95) (7.20) (4.71)
------- ------- ------- --------------
Net asset value -- end of period.... $ 54.70 $ 62.01 $ 56.89 $
======= ======= ======= ==============
Total return(a)..................... (3.75)% 21.81% 14.02% %
======= ======= ======= ==============
Ratios/Supplemental Data:
Net assets -- end of period (000
Omitted)......................... $69,279 $87,968 $92,983 $
======= ======= ======= ==============
Ratio of expenses to average net
assets(b)........................ 2.25% 2.24% 2.21% %
======= ======= ======= ==============
Ratio of net investment income to
average net assets(b)............ 1.71% 1.84% 1.81% %
======= ======= ======= ==============
Portfolio turnover rate............ 12% 21% 10% %
======= ======= ======= ==============
Average commission rate paid(c).... -- -- -- $
======= ======= ======= ==============
</TABLE>
- ---------------
(a) Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(b) The sub-advisor prior to August 4, 1997 voluntarily absorbed certain
expenses of the Fund aggregating $3,227 and $23,818 for 1993 and 1990,
respectively. If such expenses had not been absorbed, the ratio of expenses
to average net assets for 1993 and 1990 would have been 2.25% and 2.28%,
respectively, and the ratio of net investment income to average net assets
for 1993 and 1990 would have been 0.62% and 1.68%, respectively.
(c) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(d) From January , 1997, commencement of operations, to December 31, 1997.
7
<PAGE> 12
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR FLEX FUND (FORMERLY, INVESCO ADVISOR FLEX PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................... $ $ 62.64 $ 50.50 $ 54.16 $ 51.04 $ 49.35
-------- -------- -------- -------- -------- --------
Investment operations:
Net investment income..... 1.18 1.29 1.26 1.10 1.39
Net gains or losses on
securities (both
realized and
unrealized)............. 7.25 12.38 (0.91) 4.22 2.37
-------- -------- -------- -------- -------- --------
Total from investment
operations.............. 8.43 13.67 0.35 5.32 3.76
-------- -------- -------- -------- -------- --------
Distributions:
Dividends (from net
investment income)...... (1.17) (1.29) (1.25) (1.09) (1.35)
Distributions (from
capital gains).......... (3.39) (0.24) (2.76) (1.11) (0.72)
-------- -------- -------- -------- -------- --------
Total Distributions....... (4.56) (1.53) (4.01) (2.20) (2.07)
-------- -------- -------- -------- -------- --------
Net Asset value, end of
year...................... $ $ 66.51 $ 62.64 $ 50.50 $ 54.16 $ 51.04
======== ======== ======== ======== ======== ========
Total return(b)............ 13.61% 27.30% 0.64% 10.48% 7.72%
Ratios/Supplemental data:
Net assets, end of period
(000 omitted)........... $489,918 $399,162 $243,848 $274,349 $165,727
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(d)... 2.26% 2.28% 2.25% 2.25% 2.17%
======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(d)............... 1.81% 2.28% 2.32% 2.10% 2.81%
======== ======== ======== ======== ======== ========
Portfolio turnover rate... 26% 5% 36% 27% 15%
======== ======== ======== ======== ======== ========
Average commission rate
paid(f)................. $ 0.0549 -- -- -- --
======== ======== ======== ======== ======== ========
<CAPTION>
CLASS C CLASS A
--------------------------------------- --------------
YEAR ENDED DECEMBER 31, PERIOD
----------------------------- ENDED [PERIOD] ENDED
1991 1990 1989 1988(a) 1997(g)
-------- ------- -------- ------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................... $ 42.26 $ 45.32 $ 40.40 $40.00 $
-------- ------- -------- ------- -------
Investment operations:
Net investment income..... 1.47 1.64 1.70 0.88
Net gains or losses on
securities (both
realized and
unrealized)............. 8.90 (2.42) 5.18 0.40
-------- ------- -------- ------- -------
Total from investment
operations.............. 10.37 (0.78) 6.88 1.28
-------- ------- -------- ------- -------
Distributions:
Dividends (from net
investment income)...... (1.49) (1.75) (1.65) (0.88)
Distributions (from
capital gains).......... (1.79) (0.53) (0.31) --
-------- ------- -------- ------- -------
Total Distributions....... (3.28) (2.28) (1.96) (0.88)
-------- ------- -------- ------- -------
Net Asset value, end of
year...................... $ 49.35 $ 42.26 $ 45.32 $ 40.40 $
======== ======= ======== ======= =======
Total return(b)............ 24.80% (1.68)% 17.26% 4.45%(c)
Ratios/Supplemental data:
Net assets, end of period
(000 omitted)........... $104,204 $96,772 $101,260 $54,941
======== ======= ======== ======= =======
Ratio of expenses to
average net assets(d)... 2.21% 2.25% 2.33% 2.31%(e)
======== ======= ======== ======= =======
Ratio of net investment
income to average net
assets(d)............... 3.12% 3.77% 4.08% 4.06%(e)
======== ======= ======== ======= =======
Portfolio turnover rate... 24% 31% 20% 2%
======== ======= ======== ======= =======
Average commission rate
paid(f)................. -- -- -- --
======== ======= ======== ======= =======
</TABLE>
- ---------------
(a) From February 24, 1988, commencement of operations, to December 31, 1988.
(b) Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(c) Not Annualized.
(d) The sub-advisor prior to August 4, 1997 voluntarily absorbed certain
expenses of the Fund aggregating $18,993 for 1993. If such expenses had not
been absorbed, the ratio of expenses to average net assets would have been
2.26%, and the ratio of net investment income to average net assets would
have been 2.09%.
(e) Annualized.
(f) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(g) From January , 1997, commencement of operations, to December 31, 1997.
8
<PAGE> 13
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR MULTIFLEX FUND (FORMERLY, INVESCO ADVISOR MULTIFLEX PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
-------------------------------------------------------- --------------
YEAR ENDED DECEMBER 31,
----------------------------------------- PERIOD ENDED [PERIOD] ENDED
1997 1996 1995 1994 1993(a) 1997(f)
-------- -------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ $ 46.71 $ 39.13 $ 40.16 $ 40.00 $
-------- -------- -------- -------- -------- --------
Investment operations:
Net investment income.............. 0.55 0.64 0.62 0.02
Net gains or losses on securities
(both realized and unrealized)... 7.31 7.75 (1.03) 0.16
-------- -------- -------- -------- -------- --------
Total from investment operations... 7.86 8.39 (0.41) 0.18
-------- -------- -------- -------- -------- --------
Distributions:
Dividends (from net investment
income).......................... (0.53) (0.64) (0.62) (0.02)
Distributions (from capital
gains)........................... (1.50) (0.17) 0.00 0.00
-------- -------- -------- -------- -------- --------
Total Distributions................ (2.03) (0.81) (0.62) (0.02)
-------- -------- -------- -------- -------- --------
Net asset value, end of year......... $ $ 52.54 $ 46.71 $ 39.13 $ 40.16 $
======== ======== ======== ======== ======== ========
Total return(b)...................... 17.03% 21.58% (1.02)% (0.46)%(c)
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of year (000
omitted)......................... $ $266,843 $174,592 $120,220 $ 12,241 $
======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets........................... 2.45% 2.50% 2.49% 2.50%(d)
======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets............... 1.16% 1.53% 2.01% 1.09%(d)
======== ======== ======== ======== ======== ========
Portfolio turnover rate............ 62% 50% 81% 0.53%
======== ======== ======== ======== ======== ========
Average commission rate paid(e).... $ $ 0.0577 - - - $
======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
(a) From November 17, 1993, commencement of operations, to December 31, 1993.
(b) Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(c) Not Annualized.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(f) From January , 1997, commencement of operations, to December 31, 1997.
9
<PAGE> 14
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR REAL ESTATE FUND (FORMERLY INVESCO ADVISOR REAL ESTATE PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
-------------------------------- ---------------
YEAR ENDED
DECEMBER 31, PERIOD ENDED [PERIOD] ENDED
1997 1996 1995(a) 1997(f)
-------- ------- ------------ --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year......................... $ $ 43.02 $ 40.00 $
-------- ------- ------- -------
Investment operations:
Net investment income.................................... 1.30 0.64
Net gain on securities (both realized and unrealized).... 14.06 3.00
-------- ------- ------- -------
Total from investment operations......................... 15.36 3.64
-------- ------- ------- -------
Distributions:
Dividends (from net investment income)................... (1.23) (0.62)
Distributions (from capital gains)....................... (0.38) 0.00
-------- ------- ------- -------
Total Distributions...................................... (1.61) (0.62)
-------- ------- ------- -------
Net asset value, end of year............................... $ $ 56.77 $ 43.02 $
======== ======= ======= =======
Total return(b)............................................ 36.43% 9.12%(c)
======== ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)................ $ $20,566 $ 5,565 $
======== ======= ======= =======
Ratio of expenses to average net assets.................. 2.40% 2.40%(d)
======== ======= ======= =======
Ratio of net investment income to average net assets..... 3.21% 4.68%(d)
======== ======= ======= =======
Portfolio turnover rate.................................. 25% 7%
======== ======= ======= =======
Average commission rate paid(e).......................... $ $0.0601 - $
======== ======= ======= =======
</TABLE>
- ---------------
(a) From May 1, 1995, commencement of operations, to December 31, 1995.
(b) Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(c) Not Annualized.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(f) From January , 1997, commencement of operations, to December 31, 1997.
10
<PAGE> 15
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM ADVISOR INTERNATIONAL VALUE FUND (FORMERLY, INVESCO ADVISOR INTERNATIONAL
VALUE PORTFOLIO)
<TABLE>
<CAPTION>
CLASS C CLASS A
-------------------------------- --------------
YEAR ENDED
DECEMBER 31,
----------------- PERIOD ENDED [PERIOD] ENDED
1997 1996 1995(a) 1997(f)
------- ------- ------------ --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year................ $ $ 44.51 $ 40.00 $
------- ------- ------- --------
Investment operations:
Net investment income (loss).................... (0.05) 0.00
Net gain on securities (both realized and
unrealized).................................. 9.37 4.51
------- ------- ------- --------
Total from investment operations................ 9.32 4.51
------- ------- ------- --------
Distributions:
Dividends (from net investment income).......... 0.00 0.00
Distributions (from capital gains).............. (0.15) 0.00
------- ------- ------- --------
Total Distributions............................. (0.15) 0.00
------- ------- ------- --------
Net asset value, end of year...................... $ $ 53.68 $ 44.51 $
======= ======= ======= ========
Total return(b)................................... 20.99% 11.28%(c)
======= ======= ======= ========
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)....... $ $51,916 $ 9,467 $
======= ======= ======= ========
Ratio of expenses to average net assets......... 2.50% 2.50%(d)
======= ======= ======= ========
Ratio of net investment income (loss) to average
net assets................................... (0.16)% 0.03%(d)
======= ======= ======= ========
Portfolio turnover rate......................... 5% 2%
======= ======= ======= ========
Average commission rate paid(e)................. $ $0.0602 -- $
======= ======= ======= ========
</TABLE>
- ---------------
(a) From May 1, 1995, commencement of operations, to December 31, 1995.
(b) Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(c) Not annualized.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased or sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(f) From January , 1997, commencement of operations, to December 31, 1997.
11
<PAGE> 16
- --------------------------------------------------------------------------------
ABOUT THE FUNDS
The Funds are separate series of AIM Advisor Funds, Inc., an open-end,
diversified management investment company, incorporated under the laws of the
State of Maryland on September 19, 1989. Prior to August 4, 1997 and January 16,
1996 the Company was known as INVESCO Advisor Funds, Inc. and The EBI Funds,
Inc., respectively.
The address of each Fund is 11 Greenway Plaza, Suite 100, Houston, Texas
77046, and the telephone number of each Fund is (713) 626-1919. The address of
the Distributor, A I M Distributors, Inc., is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAMS
The investment objective of each of the Funds is to achieve a high total
return on investment through capital appreciation and current income, without
regard to federal income tax considerations. The investment objective of each
Fund is a fundamental policy which may not be changed without the approval of a
vote of a majority of the outstanding shares of that Fund. Investments of each
Fund will be managed without regard to whether their distributions to
shareholders will be characterized as ordinary income or long-term capital gains
(i.e., will not be managed so as to minimize or avoid taxable capital gain
distributions), and therefore may be of particular interest to investors who are
tax-exempt. A more detailed discussion of each Fund's investment objective and
policies follows. No assurance is or can be given that any Fund will accomplish
its investment objectives, as there is some degree of uncertainty in every
investment.
LARGE CAP VALUE FUND. The investment objective of the LARGE CAP VALUE FUND is
to achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations.
Substantially all of the Fund's assets will be invested in common stocks and, to
a lesser extent, securities convertible into common stocks. Such securities will
generally be issued by companies which are listed on a national securities
exchange (e.g., the New York Stock Exchange), or traded in the over-the-counter
market, and which usually pay regular dividends. At least 65% of the LARGE CAP
VALUE FUND'S investments will consist of equity securities. The LARGE CAP VALUE
FUND has established minimum investment standards with respect to its
investments in common stocks which are identical to those established by ICM,
the Fund's sub-advisor, with respect to the management of large capitalization
value portfolios for its private advisory clients. These standards include
utilization of a proprietary database consisting of 800 of the largest companies
in the United States, each of which is required to have 10 years of financial
history in order to be included in the database. The database relates the
current price of each stock to each company's historical record and ranks the
800 stocks based on the best relative value. The top 250 stocks are then
subjected to fundamental investment analysis, based on which a purchase list of
100 stocks is created, from which investments are selected. When market,
business or economic conditions warrant, in the judgment of the Advisor and ICM,
that temporary defensive measures should be employed, all or part of the assets
of the Fund may be invested temporarily in other securities, including high
quality corporate preferred stocks, bonds, debentures or other evidences of
indebtedness, and in obligations issued or guaranteed by the United States or
any instrumentality thereof, or held in cash.
Up to 10% of the LARGE CAP VALUE FUND'S total assets, measured at the time of
purchase, may be invested directly in foreign securities and unsponsored ADRs.
Up to 25% of the LARGE CAP VALUE FUND'S total assets, measured at the time of
purchase, may be invested in securities of Canadian issuers and sponsored ADRs.
FLEX FUND. The investment objective of the FLEX FUND is to achieve a high
total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. The FLEX FUND invests in a
combination of equity securities and fixed and variable income securities. It is
possible that the ability of the Fund to achieve its objective of high total
return could be diminished by its restriction on the use of non-investment grade
corporate obligations in the income securities portion of its portfolio.
Typically, a minimum of 20% of the total assets of the FLEX FUND will be
invested in equity securities and a minimum of 20% of total assets will be
invested in fixed and variable income securities. The remaining 60% of its
portfolio will vary in asset allocation according to ICM's assessment of
business, economic, and market conditions. ICM's analytical processes associated
with making allocation decisions are based upon a combination of historical
financial results and current prices for stocks and the current yield to
maturity available in the market for bonds. The premium return available from
one category relative to the other determines the actual asset deployment. ICM's
asset allocation processes are systematic and are based on current information
rather than forecasted change. The FLEX FUND seeks reasonably consistent returns
over a variety of market cycles.
The equity securities acquired by the FLEX FUND are subject to the same
standards as those equity securities acquired by the LARGE CAP VALUE FUND. The
fixed income securities in which FLEX FUND will invest will consist of those
fixed income obligations which ICM, the Fund's sub-advisor, believes are of a
higher quality than has been generally recognized by the marketplace. If ICM's
analysis is correct in these cases, the value of these obligations should
increase as the marketplace recognizes the higher quality of the obligations.
ICM intends to identify investments which it believes to be undervalued (and
therefore higher yielding) in light of, among other things, historic and current
financial condition of the issuer, current and anticipated cash flow and
borrowing requirements, strength of management, responsiveness to business
conditions, credit standing and historic and current results of operations.
12
<PAGE> 17
Fixed-income securities in which the FLEX FUND invests consist primarily of
U.S. government obligations and carefully selected fixed income corporate
obligations which ICM considers to be of investment grade quality. The FLEX FUND
invests only in those corporate obligations which in ICM's opinion have the
investment characteristics described by Moody's in rating corporate obligations
within its four highest ratings of Aaa, Aa, A and Baa and by S&P in rating
corporate obligations within its four highest ratings of AAA, AA, A and BBB. It
is possible that the ability of the Fund to achieve its objective of high total
return could be diminished by its restriction on the use of non-investment grade
corporate obligations. For a description of these ratings, see the Appendix to
the Statement of Additional Information. Investments in government obligations
will include direct obligations of the U.S. government, such as U.S. Treasury
Bills, Notes and Bonds, obligations guaranteed by the U.S. government, such as
Government National Mortgage Association obligations, and obligations of U.S.
government authorities, agencies and instrumentalities, such as Fannie Mae
(formerly, the Federal National Mortgage Association), Federal Home Loan Bank,
Federal Financing Bank and Federal Farm Credit Bank obligations.
The FLEX FUND may invest in mortgage-backed securities, including mortgage
pass-through securities and collateralized mortgage obligations ("CMOs"), which
carry a guarantee from an agency of the U.S. government or a private issuer of
the timely payment of principal and interest or, in the case of unrated
securities, are considered by the sub-advisor to be investment grade quality.
For a description of the risks associated with these securities, see "Additional
Risk Factors and Policies Relevant to the Funds - Mortgage-Related Securities"
below and "Mortgage-Related Securities" in the Statement of Additional
Information.
The FLEX FUND does not require that its investments in corporate obligations
actually be rated by Moody's or S&P, and it may acquire such unrated obligations
which in the opinion of ICM are of a quality at least equal to a rating of Baa
by Moody's or BBB by S&P. With respect to investments in unrated obligations,
the Fund will be more reliant on ICM's judgment and experience than would be the
case if the FLEX FUND invested solely in rated obligations. Obligations rated
Baa by Moody's or BBB by S&P may have speculative characteristics. A rating of
Baa by Moody's indicates that the obligation is of "medium grade," neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present, but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. A rating
of BBB by S&P indicates that the obligation is in the lowest "investment grade"
security rating. Obligations rated BBB are regarded as having an adequate
capacity to pay principal and interest. Although such obligations normally
exhibit adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and interest than obligations in the top three "investment grade" categories.
Investors should note that investments in fixed income obligations will
generally be subject to both credit risk and market risk. Credit risk relates to
the ability of the issuer to meet interest or principal payments, or both, as
they come due. Market risk relates to the fact that the market values of fixed
income obligations in which the Fund invests generally will be affected by
changes in the level of interest rates. An increase in interest rates will
generally reduce the value of portfolio investments, and a decline in interest
rates will generally increase the value of portfolio investments. Both credit
and market risks as described above are increased by investing in fixed income
obligations rated Baa by Moody's and BBB by S&P. For a more detailed description
of these ratings, see the Appendix to the Statement of Additional Information.
ICM will attempt to limit fluctuations in the market value of the FLEX FUND by
adopting a more defensive posture during periods of economic difficulty. During
such periods the FLEX FUND may acquire high quality short-term money market
instruments rated Prime-1 by Moody's or A or better by S&P or, if unrated, of
comparable quality as determined by ICM, at such times, and in such amounts, as
in the opinion of ICM seems appropriate. Short-term money market instruments
will include, among others, Treasury Bills, bankers' acceptances, certificates
of deposit, time deposits, and commercial paper. For a description of these
instruments, see the Appendix to the Statement of Additional Information.
Up to 10% of the FLEX FUND'S total assets, measured at the time of purchase,
may be invested directly in foreign securities and unsponsored ADRs. Up to 25%
of the FLEX FUND'S total assets, measured at the time of purchase, may be
invested in securities of Canadian issuers and sponsored ADRs.
MULTIFLEX FUND. The investment objective of the MULTIFLEX FUND is to achieve a
high total return on investment through capital appreciation and current income,
without regard to federal income tax considerations. The Fund seeks to achieve
its objective by investing in a combination of equity securities (consisting of
common stocks and, to a lesser degree, preferred stocks and securities
convertible into common stock) and fixed-income securities, through allocation
of its assets among the following five asset classes: stocks of large
capitalization companies ("large cap stocks"), stocks of small capitalization
companies ("small cap stocks"), fixed-income securities, real estate securities
(primarily securities of real estate investment trusts ("REITs")), and foreign
securities (primarily American Depositary Receipts ("ADRs")). Allocating assets
among different types of securities allows the Fund to take advantage of
performance opportunities in various sectors of the capital market, while
simultaneously providing diversification to reduce the risks of each investment.
The Fund may invest up to 40% of its assets in each asset class; however, the
Fund will normally invest approximately 20% of its assets in each of the five
asset classes, which represents the expected allocation when projected returns
for the five classes are all normal relative to one another. If the anticipated
return for a particular asset class is higher than normal relative to the others
on an historical basis, it will be weighted more heavily than it would under
"normal" conditions. Conversely, if the anticipated return for a
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<PAGE> 18
particular asset class is lower than normal relative to the other classes on an
historical basis, a smaller percentage of assets (i.e., less than 20%) would be
invested in that class. Each asset class is briefly described below:
Large Cap Stocks. The MULTIFLEX FUND may invest in equity securities of large
companies, defined as companies with market capitalizations among the largest
800 publicly traded U.S. corporations at the time of initial purchase. These
securities are traded principally on national securities exchanges in the United
States, but also may be traded on regional stock exchanges or in the over-
the-counter market. Such stocks are more likely to pay regular dividends than
the stocks of smaller companies.
Small Cap Stocks. The MULTIFLEX FUND may invest in small cap securities (i.e.,
those issued by companies having smaller market capitalizations than the largest
1,000 publicly traded U.S. corporations). These securities typically pay no or
minimal dividends, possess higher rates of return on invested capital, and are
subject to greater risk than securities of larger companies, such as large price
fluctuations which could increase the potential for short term gains and losses.
Fixed Income Securities. The fixed income securities in which the MULTIFLEX
FUND may invest consist of securities issued by the U.S. government, its
agencies and instrumentalities, corporate securities, mortgage- and asset-backed
securities, zero coupon bonds, municipal obligations and foreign currency
denominated securities. The MULTIFLEX FUND may invest up to 5% of its assets in
corporate bonds rated below Baa by Moody's or BBB by S&P but rated at least Ba
by Moody's or BB by S&P at the time of purchase. Investments in corporate bonds
rated below "investment grade," i.e., rated below Baa by Moody's or BBB by S&P,
are described as "speculative" by both Moody's and S&P. Such securities are
sometimes referred to as "junk bonds," and may be subject to greater market
fluctuations, less liquidity, and greater risk than higher-rated bonds. For a
further discussion of the special risks associated with investments in lower
rated securities, see "Additional Risk Factors and Policies Relevant to the
Funds -- High Yield/High Risk Securities." The average maturity of the MULTIFLEX
FUND'S investments in fixed income securities will vary depending upon economic
and market conditions. During normal market conditions, the MULTIFLEX FUND'S
overall maturity will be in the 3.5 to 6.5 year range and is expected to average
approximately 5 years over a market cycle. The sub-advisor will seek to adjust
the portfolio of fixed income securities held by the Fund to maximize current
income consistent with liquidity and the preservation of principal.
Real Estate Securities. The MULTIFLEX FUND may invest in common stocks of real
estate companies, real estate investment trusts ("REITs"), and other real estate
related securities. REITs are trusts which sell shares 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. Health care REITs invest primarily in
hospitals, nursing homes, and similar facilities, and are usually nationwide in
scope. By investing in REITs indirectly through the Fund, a shareholder will
bear not only his proportionate share of the expenses of the Fund, but also,
indirectly, similar expenses of the REIT.
Foreign Securities. The MULTIFLEX FUND may invest in foreign securities
directly or by means of sponsored or unsponsored ADRs. Up to 40% of total
assets, measured at the time of purchase, may be invested directly in foreign
securities or unsponsored ADRs. Securities of Canadian issuers and securities
purchased by means of sponsored ADRs are not subject to this 40% limitation. See
"Additional Risk Factors and Policies Relevant to the Funds -- Foreign
Securities."
IMR, the Fund's sub-advisor, regularly monitors the Fund's investment
allocations, and may vary the amount invested in each class depending upon its
assessment of business, economic and market conditions. The investment results
of the Fund depend upon the sub-advisor's ability to determine correctly the
relative attractiveness of various asset classes on a consistent basis. However,
market valuations change not only in response to economic factors but to
psychological and emotional factors as well. These factors are difficult to
interpret and quantify. It is therefore possible that the Fund may have a
minimum allocation in stocks during a significant advance in overall stock
prices. Similarly, it is possible that the Fund may have a minimum allocation in
bonds during a significant advance in overall bond prices.
There may be temporary periods during which the allocation of assets to each
asset class deviates from the specified percentage allocation because of inflows
or outflows of cash from the Fund. This is most likely to occur when the
sub-advisor has positioned the portfolio assets close to a minimum or maximum
constraint for one or more asset classes and the Fund's cash position is altered
as a result of purchases and/or redemptions of the Fund's shares. In such cases,
IMR will deploy cash or reallocate portfolio assets in a timely fashion (not to
exceed seven days) to bring portfolio composition within the specified asset
allocation.
In periods of uncertain economic and market conditions, as determined by the
sub-advisor, the Fund may depart from its basic investment objective and assume
a temporary defensive position, with a portion of its assets invested in cash or
cash equivalents and, within the fixed income asset class, U.S. government and
agency securities and investment grade corporate bonds. Cash may be held for
defensive purposes up to a maximum of 30% of the Fund's total assets. While the
Fund is in a defensive position, the opportunity to achieve capital growth will
be limited; however, the ability to maintain a defensive position enables the
Fund to seek to minimize capital losses during market downturns. Under normal
market conditions, the Fund does not intend to invest a significant portion of
its assets in cash or cash equivalents.
In managing the equity portion of the portfolio, IMR will apply a combination
of quantitative strategies and traditional stock selection methods to a very
broad universe of stocks in order to uncover the best possible values.
Typically, stocks will be examined quantitatively for their exposure to certain
factors which the sub-advisor has identified as helpful in selecting equities
which can be expected to have superior future performance. These factors may
include earnings-to-price and book value-to-price ratios, earnings estimate
revision momentum, relative market strength compared to competitors,
inventory/sales trend, and financial leverage. A
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<PAGE> 19
stock's expected return is estimated based upon its exposure to these and other
factors, and when combined with proprietary estimates of trading costs, a
risk-controlled optimal portfolio is generated. Once an initial suggested
portfolio has been generated through the computer optimization process,
traditional fundamental analysis is utilized to provide a final review before
stocks are selected for purchase by the Fund.
REAL ESTATE FUND. The investment objective of the REAL ESTATE FUND is to
achieve a high total return on investment through capital appreciation and
current income, without regard to federal income tax considerations. The Fund
seeks to achieve its objective by investing primarily in publicly traded
securities of companies related to the real estate industry. The Fund will not
invest directly in private real estate assets.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of companies which are principally engaged in the
real estate industry and are listed on U.S. securities exchanges or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
Companies listed on NASDAQ are generally smaller-capitalization companies whose
securities may be subject to large price fluctuations which could increase the
potential for short-term gains or losses. A company is "principally engaged in
the real estate industry" if at least 50% of its assets, gross income or net
profits are attributable to ownership, construction, management, or sale of
residential, commercial or industrial real estate, including listed equity REITs
which own properties, and listed mortgage REITs which make short-term
construction and development mortgage loans or which invest in long-term
mortgages or mortgage pools. By investing in REITs indirectly through the Fund,
a shareholder will bear not only his proportionate share of the expenses of the
Fund, but also, indirectly, similar expenses of the REIT. See "Additional Risk
Factors and Policies Relevant to the Funds -- Real Estate Industry Securities."
The Fund may also invest up to 35% of its total assets in equity, debt, or
convertible securities of companies whose products and services are related to
the real estate industry, such as manufacturers and distributors of building
supplies and financial institutions which issue or service mortgages. The Fund
also may invest up to 35% of its total assets in securities of companies
unrelated to the real estate industry which are believed by the sub-advisor to
be undervalued and to have capital appreciation potential. Moreover, consistent
with its objective of current income, the Fund may invest all or part of its
assets in debt securities of companies related to the real estate industry. Debt
securities purchased by the Fund will be limited to those rated at the time of
the investment as investment grade by Moody's or S&P or, if unrated, determined
by the sub-advisor to be of comparable quality. For a description of these
ratings and a discussion of factors relevant to a determination that an unrated
security is of comparable quality, see the Appendix to the Statement of
Additional Information. Up to 10% of the REAL ESTATE FUND'S total assets,
measured at the time of purchase, may be invested directly in foreign
securities. The Fund may also invest in sponsored and unsponsored ADRs.
IRAI, the Fund's sub-advisor, utilizes both fundamental real estate analysis
and quantitative securities analysis to select investments for the Fund. The
fundamental real estate characteristics of securities included in the qualifying
universe are determined by analysis of a company's management and strategic
focus and an evaluation of the location, physical attributes and cash flow
generating capacity of a company's properties. Each component of the analysis is
assigned a weight and each company is systematically ranked to determine which
company's securities are to be emphasized in the selection of Fund investments.
IRAI's quantitative analysis applies a proprietary database and multi-factor
regression model to rank individual securities in the qualifying universe from
highest to lowest expected returns. Investment consideration is limited to those
actively traded securities which are expected to outperform the NAREIT Equity
Index over the subsequent three-month period. The NAREIT Equity Index is
composed of common stocks of all tax-qualified equity REITs listed on the New
York Stock Exchange, American Stock Exchange and the NASDAQ National Market
System.
After ranking each security fundamentally and quantitatively, a diversified
portfolio is created through a statistical optimization process. This technique
incorporates such factors as expected return, volatility, correlation to other
stocks already held in the portfolio, and turnover costs.
If, in the opinion of the sub-advisor, market conditions warrant a temporary
defensive investment strategy, the Fund's assets may be invested in money market
instruments and U.S. government securities, or held in cash or equivalents. The
Fund may purchase and write put and call options on securities and securities
indices. See "Additional Risk Factors and Policies Relevant to the Funds."
For taxable clients, a portion of the dividends paid by a REIT may be
considered return on capital and would not currently be regarded as taxable
income. Therefore, depending upon an individual's tax bracket, the dividend
yield may have a higher tax effective yield.
INTERNATIONAL VALUE FUND. The investment objective of the INTERNATIONAL VALUE
FUND is to achieve a high total return on investment through capital
appreciation and current income, without regard to U.S. or foreign tax
considerations. The Fund seeks to achieve its objective by investing at least
65% of its total assets in a diversified portfolio of foreign equity securities,
consisting of common stocks, preferred stocks, warrants, and securities
convertible into common stock. The sub-advisor intends to hold securities in its
portfolio of companies domiciled in at least four countries. Moreover,
consistent with its objective of current income, the Fund may invest up to 35%
of its total assets in debt securities rated at the time of investment as
investment grade or, if unrated, determined by the sub-advisor to be of
comparable quality. For a description of these ratings and a discussion of
factors relevant to a determination that an unrated security is of comparable
quality, see the Appendix to the Statement of Additional Information.
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<PAGE> 20
Although the Fund intends to invest principally in securities of companies in
developed nations, including Europe and the Pacific Rim, it may also invest up
to 20% of its total assets in equity securities of companies domiciled in
emerging market countries. See "Additional Risk Factors and Policies Relevant to
the Funds -- Foreign Securities" and "-- Emerging Markets" below for a
discussion of the risks associated with such investments.
IGAM has access to the data and research of the Global Asset Allocation
Committee of its parent company, AMVESCAP PLC (formerly INVESCO PLC). See
"Management." This worldwide data and research from the parent company, together
with the sub-
advisor's proprietary database consisting primarily of large and medium
capitalization non-U.S. companies, provide investment research and information
which aid IGAM in determining which stocks are selected for the Fund.
Stocks within the sub-advisor's database are subjected to proprietary computer
analytical systems designed to compare the price of each stock to various
factors which include shareholders' equity per share, historic return on equity,
and the company's ability to reinvest earnings for future growth or to pay
earnings in the form of dividends. The results of this analysis are then used to
assist IGAM in determining the relative value of each stock. Each stock's final
selection is based primarily upon IGAM's opinion of the relative value of the
stock and takes into account the company's historic and current operating
results combined with an analysis of the likelihood of favorable operating
results being extended into future years. The final selection of a stock for the
Fund may also take into account the sub-advisor's opinion of the attractiveness
of the stock to the Fund as a whole based on diversification and risk
considerations.
IGAM does not make country or industry allocation decisions based on worldwide
market or industry forecasts. Consequently, the industry and country weightings
in the Fund tend to be a by-product of the stock selection process and Fund
construction. Given the difficulty of profitably applying aggressive currency
management over long periods of time, IGAM tends to incorporate currency hedging
strategies only at the extremes of relative valuation ranges.
When, in the judgment of the sub-advisor, market, business or economic
conditions warrant employing temporary defensive measures, the sub-advisor may
invest all or part of the assets of the Fund temporarily in securities of U.S.
issuers and may, for temporary defensive purposes, invest without limit in (i)
money market securities denominated in dollars or in the currency of any foreign
country and issued by entities organized in the U.S. or any foreign country,
such as short-term (less than 12 months to maturity) and medium-term (not
greater than five years to maturity) obligations issued or guaranteed by the
U.S. government or the government of a foreign country, their agencies or
instrumentalities, (ii) finance company and corporate commercial paper and other
short-term corporate obligations, in each case rated Prime-1 by Moody's or A or
better by S&P or, if unrated, of comparable quality as determined by the
sub-advisor, and (iii) repurchase agreements with banks and broker-dealers with
respect to such securities.
Although the Fund invests principally in common stocks, it may also enter into
transactions in options on securities, securities indices and currencies,
forward currency contracts, futures contracts and related options, and swap
agreements. See "Additional Risk Factors and Policies Relevant to the Funds."
- --------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND POLICIES RELEVANT TO THE FUNDS
REPURCHASE AGREEMENTS. Each of the Funds may engage in repurchase agreements.
A repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, as amended (the "1940 Act"), is a transaction in which a
fund purchases a security and simultaneously commits to sell the security to the
seller at an agreed-upon price and date (usually not more than seven days) after
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon market rate of interest which is unrelated to the coupon rate or
maturity of the purchased security. A Fund's risk is limited to the ability of
the seller to pay the agreed-upon amount on the delivery date. In the opinion of
management this risk is not material; if the seller defaults, the underlying
security constitutes collateral for the seller's obligations to pay. This
collateral, equal to or in excess of 100% of the repurchase agreement, will be
held by the custodian for the particular Fund's assets. Repurchase agreements
carry certain risks not associated with direct investments in securities,
including a possible decline in the market value of the underlying securities
and delays and costs to the Funds if the other party to the repurchase agreement
becomes insolvent. To the extent that the proceeds from a sale upon a default in
the obligation to repurchase are less than the repurchase price, the particular
Fund would suffer a loss. It is intended (but not required) that at no time will
the market value of any of the Fund's securities subject to repurchase
agreements exceed 50% of the total assets of such Fund entering into such
agreements. It is intended for these Funds to enter into repurchase agreements
with commercial banks and securities dealers. The Board of Directors will
monitor the creditworthiness of such entities.
FOREIGN SECURITIES. All of the Funds may invest directly in foreign securities
and ADRs. The MULTIFLEX FUND, INTERNATIONAL VALUE FUND and REAL ESTATE FUND may
also invest in foreign currency-denominated fixed income securities. Foreign
securities are securities issued by companies whose principal business
activities are outside the United States. These foreign securities may be
registered and traded in U.S. markets, traded in foreign markets or evidenced by
ADRs. Securities of Canadian issuers and sponsored ADRs are not included within
the limitations applicable to foreign securities. Investing in foreign
securities may involve significant risks not present in domestic investments.
For example, there is generally less publicly available information about
foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control
16
<PAGE> 21
regulations, expropriation or confiscatory taxation, limitations on the removal
of cash or other assets of a Fund, political or financial instability, or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. Foreign securities often
trade with less frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Additional costs associated with an investment
in foreign securities may include higher custodial fees than apply to domestic
custodial arrangements, and transaction costs of foreign currency conversions.
ADRs provide a method whereby the Funds may invest in securities issued by
companies whose principal business activities are outside the United States.
These securities will not be denominated in the same currency as the securities
into which they may be converted. Generally, ADRs, in registered form, are
designed for use in U.S. securities markets.
ADRs are receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities, and may be issued as sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities trade in the form of ADRs. In unsponsored programs, the
issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, in some cases it may be easier to obtain financial
information from an issuer that has participated in the creation of a sponsored
program. The LARGE CAP VALUE FUND and FLEX FUND intend to invest only in
sponsored ADRs. The MULTIFLEX FUND, INTERNATIONAL VALUE FUND and REAL ESTATE
FUND may invest in both sponsored and unsponsored ADRs.
Since certain Funds are authorized to invest in securities denominated or
quoted in currencies other than the U.S. dollar, as well as ADRs with respect to
such securities, changes in foreign currency exchange rates relative to the U.S.
dollar will affect the value of such ADRs and securities in the Funds and the
unrealized appreciation or depreciation of such investments. Changes in foreign
currency exchange rates relative to the U.S. dollar will also affect a Fund's
yield on assets denominated in currencies other than the U.S. dollar and ADRs.
EMERGING MARKETS. The INTERNATIONAL VALUE FUND may invest in securities of
companies domiciled in emerging market countries. Investment in emerging market
countries presents risks greater in degree than, and in addition to, those
presented by investment in foreign issuers in general. A number of emerging
market countries restrict, to varying degrees, foreign investment in stocks.
Repatriation of investment income, capital, and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some emerging
market countries. A number of the currencies of developing countries have
experienced significant declines against the U.S. dollar in recent years, and
devaluation may occur subsequent to investments in these currencies by the
INTERNATIONAL VALUE FUND. Inflation and rapid fluctuations in inflation rates
have had and may continue to have negative effects on the economies and
securities markets of certain emerging market countries. Many of the emerging
securities markets are relatively small, have low trading volumes, suffer
periods of relative illiquidity, and are characterized by significant price
volatility. There is a risk in emerging market countries that a future economic
or political crisis could lead to price controls, forced mergers of companies,
expropriation or confiscatory taxation, seizure, nationalization, or creation of
government monopolies, any of which may have a detrimental effect on the Fund's
investments.
OPTIONS. Each Fund may purchase and write put and call options on securities.
The purpose of engaging in put and call transactions is to hedge against changes
in the market value of the Fund's portfolio securities caused by fluctuating
interest rates, fluctuating currency exchange rates and changing market
conditions, and to close out or offset existing positions in such options or
futures contracts as described below. The Funds will not engage in such
transactions for speculative purposes.
A Fund may write a call or put option only if the option is "covered" by the
Fund holding a position in the underlying securities or by other means which
would permit immediate satisfaction of the Fund's obligation as writer of the
option. The purchase and writing of options involve certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
put or call option purchased by a Fund is not sold when it has remaining value,
and if the market price of the underlying security, in the case of a put,
remains equal to or greater than the exercise price or, in the case of a call,
remains less than or equal to the exercise price, the Fund will lose its entire
investment in the option. Also, where a put or call option on a particular
security is purchased to hedge against price movements in a related security,
the price of the put or call option may move more or less than the price of the
related security. There can be no assurance that a liquid market will exist when
a Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options markets, a Fund may be
unable to close out a position.
Each Fund may also buy or sell put and call options on foreign securities and
foreign currencies. Currency options traded on U.S. or other exchanges may be
subject to position limits which may limit the ability of the Funds to reduce
foreign currency risk using such options. Over-the-counter options differ from
traded options in that they are two-party contracts with price and other terms
negotiated between buyer and seller and generally do not have as much market
liquidity as exchange-traded options.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Each Fund may enter into
contracts for the future delivery of fixed income securities commonly referred
to as "interest rate futures contracts." These futures contracts will not be
used for speculation
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<PAGE> 22
but only as a hedge against anticipated interest rate changes. A Fund also may
use options to purchase or sell covered interest rate futures contracts or debt
securities and may write covered call options and cash secured puts. Covered
call options and cash secured puts will not exceed 25% of total assets. Each
Fund may invest in commodity futures contracts and options, foreign currency
futures contracts and options, and stock index futures contracts and options
thereon. Such contracts may not be entered into for speculative purposes. When a
Fund purchases a futures contract, an amount of liquid assets equal to the fair
market value less initial and variation margin of the futures contract will be
segregated with an approved custodian to collateralize the position and thereby
ensure that such futures contract is "covered."
The Funds are subject to certain restrictions on their use of financial
futures contracts and options. A Fund will not enter into financial futures
contracts or purchase options on financial futures contracts if, after such a
transaction, the sum of initial margin deposits on the open financial futures
contracts and of premiums paid on open options on financial futures contracts
would exceed 5% of the Fund's total assets. Subject to the provisions of the
Company's fundamental investment policies, a Fund will not enter into financial
futures contracts or write options (except to close out open positions) if,
after such a transaction, the aggregate principal amount of all open financial
futures contracts and all options under which the Fund is obligated would exceed
100% of the Fund's total assets. A Fund will not purchase put and call options
on debt securities if, after such a transaction, the sum invested for premiums
in such options exceeds 2% of the Fund's total assets.
There are several risks associated with the use of futures and futures
options. The value of a futures contract may decline. With respect to
transactions for hedging, there can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the portfolio
securities being hedged. An incorrect correlation could result in a loss on both
the hedged securities in a Fund and the hedging vehicle so that the portfolio
return might have been greater had hedging not been attempted. There can be no
assurance that a liquid market will exist at a time when a Fund seeks to close
out a futures contract or a futures option position. Most futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures contract
prices during a single day; once the daily limit has been reached on a
particular contract, no trades may be made that day at a price beyond that
limit. In addition, certain of these instruments are relatively new and without
a significant trading history. As a result, there is no assurance that an active
secondary market will develop or continue to exist. Lack of a liquid market for
any reason may prevent a Fund from liquidating an unfavorable position and the
Fund would remain obligated to meet margin requirements until the position is
closed.
The Funds will only enter into futures contracts or futures options which are
standardized and traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system. A Fund will use
financial futures contracts and related options only for "bona fide hedging"
purposes, as such term is defined in applicable regulations of the Commodity
Futures Trading Commission, or, with respect to positions in financial futures
and related options that do not qualify as "bona fide hedging" positions, will
enter into such non-hedging positions only to the extent that aggregate initial
margin deposits plus premiums paid by it for open futures option positions, less
the amount by which any such positions are "in-the-money," would not exceed 5%
of the Fund's total assets.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each Fund may enter into forward
foreign currency exchange contracts ("forward contracts") to attempt to minimize
the risk to the Fund from adverse changes in the relationship between the U.S.
dollar and foreign currencies. A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers. Such contracts may not be entered into for speculative purposes. A
Fund will not enter into forward contracts if, as a result, more than 10% of the
value of its total assets would be committed to the consummation of such
contracts, and will segregate assets or "cover" its positions consistent with
requirements under the 1940 Act to avoid any potential leveraging of the Fund.
SWAP AGREEMENTS. Each Fund may enter into interest rate, index and currency
exchange rate swap agreements for purposes of attempting to obtain a particular
desired return at a lower cost to the Fund than if it had invested directly in
an instrument that yielded that desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments. The
gross returns to be exchanged or "swapped" between the parties are calculated
with respect to a "notional amount," i.e., the return on or increase in value of
a particular dollar amount invested at a particular interest rate, in a
particular foreign currency, or in a "basket" of securities representing a
particular index. Commonly used swap agreements include interest rate caps,
under which, in return for a premium, one party agrees to make payments to the
other to the extent that interest rates exceed a specified rate, or "cap";
interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a
specified level, or "floor"; and interest rate collars, under which a party
sells a cap and purchases a floor or vice versa in an attempt to protect itself
against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictive basis on which
to calculate the obligations which the parties to a swap agreement have agreed
to exchange. Most swap agreements entered into by a Fund would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, a
Fund's obligations (or rights) under a swap agreement will generally be equal
only to the net amount to be paid or received under the agreement based on the
relative values of the positions held by each party to the agreement (the "net
amount"). Obligations under a swap agreement will be accrued daily (offset
against amounts owing to the Fund) and any accrued but unpaid net amounts owed
to a swap counterparty will be covered by segregating liquid assets, to avoid
any potential leveraging of the Fund. A Portfolio will not enter into a swap
agreement with any single party if the net amount owed or to be
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<PAGE> 23
received under existing contracts with that party would exceed 5% of the Fund's
total assets. For a discussion of the tax considerations relating to swap
agreements, see the Statement of Additional Information under "Distributions and
Tax Information."
MORTGAGE-RELATED SECURITIES. As described under "Investment Objectives and
Policies," the FLEX FUND may invest in mortgage pass-through securities and
CMOs, and the MULTIFLEX FUND and REAL ESTATE FUND may invest in mortgage-related
securities, including CMOs and mortgage-backed bonds, and asset-backed
securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgage loans in which payments of both interest and principal on
the securities are generally made monthly, in effect "passing through" monthly
payments made by the individual borrowers on the mortgage loans which underlie
the securities (net of fees paid to the issuer or guarantor of the securities).
Payment of principal and interest on some mortgage pass-through securities may
be guaranteed as to principal and interest (but not as to market value) by the
full faith and credit of the U.S. government (in the case of securities
guaranteed by the Government National Mortgage Association ("GNMA")); or
guaranteed by agencies or instrumentalities of the U.S. government (in the case
of securities guaranteed by Fannie Mae or the Federal Home Loan Mortgage
Corporation ("FHLMC"), which, while not supported by the full faith and credit
of the U.S. government, are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations). For more information on GNMA
certificates and FNMA and FHLMC mortgage-backed obligations, see
"Mortgage-Related Securities" in the Statement of Additional Information.
CMOs -- are securities which are typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FNMA, or FHLMC. Similar to
a bond, interest and pre-paid principal on a CMO are paid, in most cases,
semiannually. CMOs are structured into multiple classes, with each class bearing
a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class; investors holding the longer maturity classes will receive principal only
after the first class has been retired. CMOs that are issued or guaranteed by
the U.S. government or by any of its agencies or instrumentalities will be
considered U.S. government securities by the Portfolios, while other CMOs, even
if collateralized by U.S. government securities, will have the same status as
other privately issued securities for purposes of applying a Portfolio's
diversification tests.
Mortgage-backed bonds -- are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and Fannie Mae and FHLMC pass-through
securities) or on a modified basis (as with CMOs). Accordingly, a change in the
rate of prepayments on the pool of mortgages could change the effective maturity
of a CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds can provide that they are callable by the issuer prior to
maturity).
Asset-backed securities -- are securities representing interests in other
types of financial assets, such as automobile-finance receivables or credit-card
receivables. Such securities are subject to many of the same risks as are
mortgage-backed securities, including prepayment risks and risks of foreclosure.
They may or may not be secured by the receivables themselves or may be unsecured
obligations of their issuers. For further information on these securities, see
the Statement of Additional Information.
RISKS OF MORTGAGE-RELATED SECURITIES. Investment in mortgage-backed securities
poses several risks, including prepayment, market, and credit risk. Prepayment
risk reflects the risk that borrowers may prepay their mortgages faster than
expected, thereby affecting the investment's average life and perhaps its yield.
Whether or not a mortgage loan is prepaid is almost entirely controlled by the
borrower. Borrowers are most likely to exercise prepayment options at the time
when it is least advantageous to investors, generally prepaying mortgages as
interest rates fall, and slowing payments as interest rates rise. Besides the
effect of prevailing interest rates, the rate of prepayment and refinancing of
mortgages may also be affected by home value appreciation, ease of the
refinancing process and local economic conditions.
Market risk reflects the risk that the price of the security may fluctuate
over time. The price of mortgage-backed securities may be particularly sensitive
to prevailing interest rates, the length of time the security is expected to be
outstanding, and the liquidity of the issue. In a period of unstable interest
rates, there may be decreased demand for certain types of mortgage-backed
securities, and a Portfolio invested in such securities wishing to sell them may
find it difficult to find a buyer, which may in turn decrease the price at which
they may be sold.
Credit risk reflects the risk that a Fund may not receive all or part of its
principal because the issuer or credit enhancer has defaulted on its
obligations. Obligations issued by U.S. government-related entities are
guaranteed as to the payment of principal and interest, but are not backed by
the full faith and credit of the U.S. government. The performance of private
label mortgage-backed securities, issued by private institutions, is based on
the financial health of those institutions. With respect to GNMA certificates,
although GNMA guarantees timely payment even if homeowners delay or default,
tracking the "pass-through" payments may, at times, be difficult.
For further information, see the Statement of Additional Information.
ZERO COUPON OBLIGATIONS. The MULTIFLEX FUND may invest in zero coupon
obligations, which are fixed-income securities that do not make regular interest
payments. Instead, zero coupon obligations are sold at substantial discounts
from their face value. The Fund accrues income on these investments for tax and
accounting purposes, which is distributable to shareholders and which, because
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<PAGE> 24
no cash is received at the time of accrual, may require the liquidation of other
portfolio securities to satisfy distribution obligations, in which case the Fund
will forego the purchase of additional income-producing assets with these funds.
The difference between a zero coupon obligation's issue or purchase price and
its face value represents the imputed interest an investor will earn if the
obligation is held until maturity. Zero coupon obligations may offer investors
the opportunity to earn higher yields than those available on ordinary
interest-paying obligations of similar credit quality and maturity. However,
zero coupon obligation prices may also exhibit greater price volatility than
ordinary fixed-income securities because of the manner in which their principal
and interest are returned to the investor.
REAL ESTATE INDUSTRY SECURITIES. Because each of the MULTIFLEX FUND and REAL
ESTATE FUND invests in securities of companies engaged in the real estate
industry, it could conceivably own real estate directly as a result of a default
on debt 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 conditions, adverse changes in the climate
for real estate, increases in property taxes and operating expenses, 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 any
changes in the value of the underlying property owned by the trusts, while
mortgage REITs may be affected by the quality of any credit extended. Equity and
mortgage REITs are dependent upon management skill, are not diversified, and are
therefore subject to the risk of financing single or a limited number of
projects. Such trusts are also subject to heavy cash flow dependency, defaults
by borrowers, self-liquidation, and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code and 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 proportionate
share of the expenses of the Fund, but also, indirectly, similar expenses of the
REITs.
HIGH YIELD/HIGH RISK SECURITIES. The MULTIFLEX FUND may invest up to 5% of
assets in securities rated lower than Baa by Moody's or BBB by S&P, but rated at
least Ba by Moody's or BB by S&P or, if unrated, determined by the Fund's
sub-advisor to be of comparable quality. Securities rated lower than Baa by
Moody's or lower than BBB by S&P are sometimes referred to as "high yield,"
"high risk," or "junk" bonds. In addition, securities rated Baa are considered
by Moody's to have some speculative characteristics.
Investing in high yield securities involves special risks in addition to the
risks associated with investments in higher rated debt securities. High yield
securities may be regarded as predominately speculative with respect to the
issuer's continuing ability to meet principal and interest payments. Analysis of
the creditworthiness of issuers of high yield securities may be more complex
than for issuers of higher quality debt securities, and the ability of a Fund to
achieve its investment objective may, to the extent of its investments in high
yield securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher quality securities.
High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than higher grade securities. The
prices of high yield securities have been found to be less sensitive to interest
rate changes than more highly rated investments, but more sensitive to economic
downturns or individual corporate developments. A projection of an economic
downturn or of a period of rising interest rates, for example, could cause a
decline in high yield security prices because the advent of a recession could
lessen the ability of a highly leveraged company to make principal and interest
payments on its debt securities. If the issuer of high yield securities
defaults, a Fund may incur additional expenses to seek recovery. In the case of
high yield securities structured as zero coupon securities or payment-in-kind
securities (which pay interest in the form of additional securities), the market
prices of such securities are affected to a greater extent by interest rate
changes, and therefore tend to be more volatile than securities which pay
interest periodically and in cash. Moreover, a Fund records the interest on
these securities as income even though it receives no cash interest until the
security's maturity or payment date. A Fund will be required to distribute all
or substantially all such amounts annually and may have to obtain the cash to do
so by selling securities which otherwise would continue to be held. Shareholders
will be taxed on these distributions.
The secondary markets on which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading markets could adversely affect and cause large fluctuations in
the daily net asset value of a Fund's shares. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high yield securities, especially in a thinly traded
market.
The use of credit ratings as the sole method of evaluating high yield
securities can involve certain risks. For example, credit rating agencies
evaluate the safety of principal and interest payments, not the market value
risk of high yield securities. Also, credit rating agencies may fail to change
credit ratings in a timely fashion to reflect events since the security was last
rated. The sub-advisor does not rely solely on credit ratings when selecting
securities for the Funds, and develops its own independent analysis of issuer
credit quality. If a credit rating agency changes the rating of a portfolio
security held by the Fund, the Fund may retain the security if the sub-advisor
deems it in the best interest of the shareholders.
DELAYED DELIVERY TRANSACTIONS ("FORWARD COMMITMENTS"). The MULTIFLEX FUND,
REAL ESTATE FUND and INTERNATIONAL VALUE FUND may purchase or sell securities on
a when-issued or delayed delivery basis. These transactions involve a commitment
by the Fund to purchase or sell securities for a predetermined price or yield,
with payment and delivery taking place more than
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<PAGE> 25
three days in the future, or after a period longer than the customary settlement
period for that type of security. When delayed delivery purchases are
outstanding, the Fund will segregate cash or liquid securities in an amount
sufficient to meet the purchase price. Typically, no income accrues on
securities purchased on a delayed delivery basis prior to the time delivery of
the securities is made, although a Fund may earn income on securities it has
segregated. When purchasing a security on a delayed delivery basis, a Fund
assumes the rights and risks of ownership of the security, including the risk of
price and yield fluctuations, and takes such fluctuations into account when
determining its net asset value. Because a Fund is not required to pay for the
security until the delivery date, these risks are in addition to the risks
associated with the Fund's other investments. If a Fund remains substantially
fully invested at a time when delayed delivery purchases are outstanding, the
delayed delivery purchases may result in a form of leverage. When a Fund has
sold a security on a delayed delivery basis, the Fund does not participate in
future gains or losses with respect to the security. If the other party to a
delayed delivery transaction fails to deliver or pay for the securities, the
Fund could miss a favorable price or yield opportunity or could suffer a loss. A
Fund may dispose of or renegotiate a delayed delivery transaction after it is
entered into, and may sell when-issued securities before they are delivered,
which may result in a capital gain or loss.
FUND SECURITIES LOANS. Each of the Funds may lend limited amounts of portfolio
securities (not to exceed 10% of total assets) to broker-dealers or other
institutional investors. (See the Statement of Additional Information.)
PORTFOLIO TURNOVER. Generally, the rate of portfolio turnover will not be a
limiting factor when the Funds deem changes appropriate; however, it is
anticipated that no Fund's annual portfolio turnover rate generally will exceed
100%. In any particular year, however, market conditions could result in
portfolio activity at a greater rate than anticipated. Fund turnover rate, along
with the Company's brokerage allocation policies, are discussed in the Statement
of Additional Information.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The Directors of the Company, on behalf of the Funds, have adopted certain
investment restrictions which are fundamental policies and may not be changed as
to any Fund without the approval of the holders of a majority of such Fund's
outstanding voting securities (which in this Prospectus means, as to each Fund,
the vote of the lesser of (i) 67% or more of the voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (ii) more than 50% of the outstanding
voting securities). The Statement of Additional Information contains, under the
heading "Investment Restrictions," specific enumerated investment restrictions
which govern the investments of each Fund. The Company's investment restrictions
include, among others, limitations with respect to the percentage of the value
of any Fund's total assets that may be invested in any one company or any one
industry.
All of the Funds are "diversified" for purposes of the 1940 Act. It is a
fundamental restriction applicable to the MULTIFLEX FUND, REAL ESTATE FUND and
INTERNATIONAL VALUE FUND that, with respect to 75% of each Fund's assets, the
Fund will not purchase a security (other than a security issued or guaranteed by
the U.S. government, its agencies or instrumentalities) if, as a result, more
than 5% of the assets of the Fund would be invested in the securities of the
issuer. With respect to the LARGE CAP VALUE FUND and FLEX FUND, these
diversification requirements are applied to 100% of the Fund's total assets.
Except for the Funds' investment objectives and those investment policies of a
Fund specifically identified as fundamental, all investment policies and
practices described in this Prospectus and in the Statement of Additional
Information are not fundamental and, therefore, may be changed by the Board of
Directors without shareholder approval. Such changes may result in a Fund having
investment objectives different from the investment objectives which the
shareholder considered appropriate at the time of investment in the Fund. For a
description of each Fund's fundamental and non-fundamental investment policies,
see "Investment Restrictions" in the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds is vested in
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company, on behalf of one or more of the
Funds, and persons or companies furnishing services to the Funds, including the
investment advisory agreement with AIM, the agreements with AIM Distributors
regarding distribution of each Fund's shares and the agreements with State
Street Bank and Trust Company as the custodian. The day-to-day operations of
each Fund are delegated to the officers of the Company and to AIM, subject
always to the objective and policies of the applicable Fund and to the general
supervision of the Board of Directors. Certain directors and officers of the
Company are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent corporation of AIM. Information concerning the Board of
Directors may be found in the Statement of Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as investment advisor to each of the Funds. AIM has
been engaged in the investment advisory business since 1976, and is an indirect
wholly owned subsidiary of AMVESCAP PLC, which with its subsidiaries is an
independent management investment group engaged in institutional investment
management and retail market fund businesses in the United States, Europe and
the Pacific region.
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<PAGE> 26
SUB-ADVISORS. The sub-advisor to the LARGE CAP VALUE FUND and FLEX FUND is
INVESCO Capital Management, Inc., a Delaware corporation having its principal
office at 1315 Peachtree Street, N.E., Atlanta, Georgia 30309. ICM also has an
advisory office in Coral Gables, Florida, and a marketing office in San
Francisco, California and has been engaged in the investment advisory business
since 1979. ICM believes it has one of the nation's largest discretionary
portfolios of tax-exempt accounts (such as pension and profit sharing funds for
corporations and state and local governments). ICM currently sponsors one
investment company, INVESCO Treasurer's Series Trust, which currently offers two
portfolios. In addition, ICM furnishes investment advice to the following other
investment companies: The Large Cap Value Fund of the Prudential Target
Portfolio Trust, the Sentinel World Fund, the Frank Russell Canada Fund, the
Russell Large Cap Fund, certain portfolios of the INVESCO Variable Investment
Funds, Inc., and certain portfolios of INVESCO Value Trust. Funds are supervised
by investment managers who utilize ICM's facilities for investment research and
analysis, review of current economic conditions and trends, and consideration of
long-range investment policy matters.
The sub-advisor to the MULTIFLEX FUND is INVESCO Management & Research, Inc.,
a Massachusetts corporation having its principal office at 101 Federal Street,
Boston, Massachusetts 02110. IMR has been engaged in the investment advisory
business since 1969. IMR currently manages predominately pension and endowment
accounts. IMR currently sponsors one investment company, The Commonwealth
Investment Trust, which consists of one portfolio.
The sub-advisor to the REAL ESTATE FUND is INVESCO Realty Advisors, Inc., a
Texas corporation having its principal office at One Lincoln Centre, Suite 1200,
5400 LBJ Freeway/LB-2, Dallas, Texas 75240. IRAI has been a registered
investment advisor and qualified professional asset manager since 1983. As of
December 31, 1997, IRAI's portfolio contained [98] properties totalling over
[26.5] million square feet of commercial real estate and [13,651] apartment
units. IRAI currently advises one other mutual fund, INVESCO Realty Fund.
The sub-advisor to INTERNATIONAL VALUE FUND is INVESCO Global Asset Management
Limited, a Bermuda corporation having its principal office at Cedar House, 41
Cedar Avenue, Hamilton, HM 12 Bermuda. IGAM is registered as an investment
advisor under the Investment Advisors Act of 1940. IGAM's responsibilities
include analyzing global economic trends and establishing AMVESCAP PLC's global
investment asset allocations for AMVESCAP PLC affiliates.
AIM and ICM provide general investment advice and portfolio management to the
LARGE CAP VALUE FUND and FLEX FUND. AIM and IMR provide general investment
advice and portfolio management to the MULTIFLEX FUND. AIM and IGAM provide
general investment advice and portfolio management to INTERNATIONAL VALUE FUND.
AIM and IRAI provide general investment advice and portfolio management to the
REAL ESTATE FUND. AIM, ICM, IGAM, IRAI and IMR are indirect wholly owned
subsidiaries of AMVESCAP PLC, formerly AMVESCO PLC. AMVESCAP PLC is a
publicly-traded holding company that, through its subsidiaries, is one of the
largest independent investment management businesses in the world.
Effective August 4, 1997, AIM became the investment advisor for the Funds
pursuant to an investment advisory agreement with terms substantially identical
to those of the company's prior investment advisory contracts with INVESCO
Services, Inc. ("ISI"). The sub-advisors did not change other than the
substitution of IGAM for ICM as sub-advisor to INTERNATIONAL VALUE FUND.
Under the respective Investment Advisory and Sub-Advisory Agreements (the
"Advisory Agreements") with the Company, AIM, subject to the supervision of the
Directors, and the sub-advisors, subject to the supervision of AIM and the
Directors (see the Statement of Additional Information under "Officers and
Directors"), and in conformance with each Fund's stated policies, manage the
Funds' investment operations. In this regard, it will be the responsibility of
the respective sub-advisor (subject to the supervision of the Advisor) not only
to make investment decisions for the Funds, but also to place purchase and sale
orders for the portfolio transactions of the Funds. The Advisor and sub-advisors
may follow a policy of considering sales of shares of the Company as a factor in
the selection of broker-dealers to execute portfolio transactions. See the
Statement of Additional Information under "Brokerage and Portfolio
Transactions." In fulfilling its responsibilities, the Advisor may engage the
services of other investment managers with respect to one or more of the Funds,
subject to approval of the Board of Directors.
PORTFOLIO MANAGERS. Information about the individual portfolio managers
responsible for management of the Funds, including their business experience for
the past five years, is provided below.
LARGE CAP VALUE FUND
Michael C. Harhai, C.F.A.
Portfolio Manager Portfolio Manager, ICM (March 1993 to present);
Senior Vice President and Manager, Sovran Capital
Management Corp. (Jan. 1992 to March 1993); Senior
Vice President and Portfolio Manager, C&S/Sovran
Capital Management (July 1991 to Jan. 1992).
Chartered Financial Analyst. Trustee, Atlanta Society
of Financial Analysts. Mr. Harhai has managed the
LARGE CAP VALUE FUND since July 1993.
R. Terrence Irrgang, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, ICM (April 1992 to present);
Consultant, Towers, Perrin, Forster & Crosby (Oct.
1988 to April 1992). Chartered Financial Analyst.
Atlanta Society of Financial Analysts. Mr. Irrgang
has assisted in managing the LARGE CAP VALUE FUND
since July 1993.
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<PAGE> 27
FLEX FUND
Edward C. Mitchell, Jr.,
C.F.A.
Portfolio Manager Chairman and Director, ICM (March 1997 to present);
President and Director, ICM (Jan. 1992 to March
1997); Vice President and Director, ICM (Jan. 1979 to
Dec. 1991). Chartered Financial Analyst. Chartered
Investment Counselor. Past President, Atlanta Society
of Financial Analysts. Mr. Mitchell has managed the
FLEX FUND since its commencement of operations in
February 1988.
Margaret (Peg) W. Durkes,
CFA
Assistant Portfolio
Manager Portfolio Manager, ICM (July 1993-Present); Vice
President and Portfolio Manager, Sovran Capital
Management (July 1991-July 1993). Chartered Financial
Analyst. Atlanta Society of Financial Analysts. Ms.
Durkes has assisted in managing the FLEX FUND since
August 1997.
David S. Griffin, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, ICM (March 1991 to present).
Chartered Financial Analyst. Atlanta Society of
Financial Analysts. Mr. Griffin has assisted in
managing the FLEX FUND since July 1993.
MULTIFLEX FUND
Robert S. Slotpole
Portfolio Manager Senior Vice President, Director of Equities and
Portfolio Manager, IMR (June 1993 to present);
Portfolio Manager, Hamilton Partners (February 1992
to June 1993); Vice President and Portfolio Manager,
The First Boston Corporation (May 1985 to February
1992). Mr. Slotpole is responsible for the asset
allocation decisions regarding the Fund's investments
in its five asset classes. Mr. Slotpole is assisted
by a team of portfolio managers, each of whom
specializes in one of the asset classes in which the
Fund may invest. Each portfolio manager is also
responsible for the security selection in his asset
class within the overall asset allocation parameters
and security selection methodologies established by
IMR. Mr. Slotpole has managed the MULTIFLEX FUND
since July 1, 1994.
Daniel A. Kostyk
Assistant Portfolio
Manager Portfolio Manager and Quantitative Analyst, IMR (June
1995 to present); Engineering Economic Analyst, Fluor
Daniel Inc. (October 1984 to May 1995). Mr. Kostyk
has assisted in managing the MULTIFLEX FUND since
June 1995.
REAL ESTATE FUND
Joe V. Rodriquez, Jr.
Portfolio Manager Director of Real Estate Securities and Portfolio
Manager, IRAI (1990 to present). Certified Financial
Planner. Mr. Rodriquez is assisted by a team of
portfolio managers, each of whom specializes in
different REIT sectors. He has managed the REAL
ESTATE FUND since its commencement of operations on
May 1, 1995.
Todd A. Johnston
Portfolio Manager Portfolio manager, IRAI (1995 to present), formerly
portfolio manager with IMR (1986 to 1995). Mr.
Johnston has assisted in managing the REAL ESTATE
FUND since its commencement of operations on May 1,
1995.
James W. Trowbridge
Portfolio Manager Portfolio Manager, IRAI (1989 to present). Mr.
Trowbridge has assisted in managing the Real Estate
fund since its commencement of operations on May 1,
1995.
INTERNATIONAL VALUE FUND
W. Lindsay Davidson
Portfolio Manager Portfolio Manager, IGAM (August 4, 1997 to present);
Portfolio Manager, ICM (April 1993 to August 4,
1997); Portfolio Manager, INVESCO Asset Management
Limited (May 1984 to March 1993). Mr. Davidson has
managed the INTERNATIONAL VALUE FUND since its
commencement of operations in May 1995.
Erik B. Granade, C.F.A.
Assistant Portfolio
Manager Portfolio Manager, IGAM (August 1997 to present);
Portfolio Manager, ICM (April 1996 to present);
Partner and Portfolio Manager, Cashman Farrell &
Associates (June 1994 to March 1996); Portfolio
Manager, Provident Capital Management (October 1990
to May 1994). Chartered Financial Analyst. Chartered
Investment Counselor. Mr. Granade has assisted in
managing the INTERNATIONAL VALUE FUND since 1997.
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<PAGE> 28
ADVISORY FEES. For the services to be rendered and the expenses to be assumed by
the Advisor under the Investment Advisory Agreement, each of the Funds pays to
the Advisor an advisory fee which is computed daily and paid as of the last day
of each month on the basis of each Fund's daily net asset value, using for each
daily calculation the most recently determined net asset value of the Fund. See
"Determination of Net Asset Value."
On an annual basis, the advisory fee is equal to 0.75% of the average net
asset value of each of the LARGE CAP VALUE FUND and FLEX FUND; 0.90% of the
average net asset value of the REAL ESTATE FUND; and 1.00% of the average net
asset value of each of the MULTIFLEX FUND and INTERNATIONAL VALUE FUND. For the
period August 4, 1997 through December 31, 1997, AIM received total advisory
fees which represented [0.00%] of the LARGE CAP VALUE FUND, [0.00%] of the FLEX
FUND, [0.00%] of the MULTIFLEX FUND, [0.00%] of the REAL ESTATE FUND and [0.00%]
of the INTERNATIONAL VALUE FUND, (annualized), respectively, of each Fund's
average daily net assets.
For services rendered to the LARGE CAP VALUE FUND and FLEX FUND, by ICM under
those Funds' Sub-Advisory Agreement, AIM pays to ICM a sub-advisory fee which is
computed daily and paid as of the last day of each month on the basis of each
Fund's daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
For the fiscal year ended December 31, 1997, the sub-advisory fee paid to ICM
was equal to [0.00]% and [0.00]% of the average net asset value of the Fund for
each of the LARGE CAP VALUE FUND and FLEX FUND.
For services rendered to the MULTIFLEX FUND by IMR under that Fund's
Sub-Advisory Agreement, AIM pays to IMR a sub-advisory fee which is computed
daily and paid as of the last day of each month on the basis of the Portfolio's
daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
For the fiscal year ended December 31, 1997, the sub-advisory fee paid to IMR
was equal to [0.00]% of average net assets of the Fund.
For services rendered to the REAL ESTATE FUND by IRAI under that Fund's
Sub-Advisory Agreement, AIM pays to IRAI a sub-advisory fee which is computed
daily and paid as of the last day of each month on the basis of the Fund's daily
net asset value using for each daily calculation the most recently determined
net asset value of the Fund. See "Determination of Net Asset Value." For the
fiscal year ended December 31, 1997, the sub-advisory fee paid to IRAI was equal
to [0.00%] of average net assets of the Fund.
For services rendered to the INTERNATIONAL VALUE FUND by IGAM under that
Fund's Sub-Advisory Agreement, AIM pays to IGAM a sub-advisory fee which is
computed daily and paid as of the last day of each month on the basis of the
Fund's daily net asset value using for each daily calculation the most recently
determined net asset value of the Fund. See "Determination of Net Asset Value."
On an annual basis, the sub-advisory fee is equal to 0.35% of average net assets
up to $50 million; 0.30% on average net assets over $50 million up to $100
million; and 0.25% on average net assets in excess of $100 million. For the
period August 4, 1997 through December 31, 1997, IGAM received total
sub-advisory fees which represented [0.00%] (annualized) of the Fund's average
daily net assets.
As manager to the Company, AIM also provides operating services pursuant to an
Operating Services Agreement with the Company. Under the Operating Services
Agreement, each Fund pays to AIM an annual fee of 0.45% of daily net assets of
the Fund for providing or arranging to provide accounting, legal (except
litigation), dividend disbursing, transfer agent, registrar, custodial,
shareholder reporting, sub-accounting and recordkeeping services and functions.
The agreement provides that the Manager pays all fees and expenses associated
with these and other functions, including, but not limited to, registration
fees, shareholder meeting fees, and proxy statement and shareholder report
expenses.
The combined effect of the Advisory Agreements, Operating Services Agreement,
and Plan of Distribution of the Company (see "Distribution Plan" below) is to
place a cap or ceiling on the total expenses of each Fund, other than brokerage
commissions, interest, taxes, litigation, directors' fees and expenses, and
other extraordinary expenses. AIM has voluntarily agreed to adhere to maximum
expense ratios for the Class A and Class C shares of the Funds for a period of
three years beginning August 4, 1997, provided that expense ratios might change
within this period in the event one or more Funds were reorganized or merged
with another fund. Any such reorganization or merger would require approval by
shareholders of the affected Fund(s). To the extent that expenses exceed the
amounts listed below, AIM will waive its fees or reimburse the Fund to assure
that expenses do not exceed the designated maximum amounts as qualified above.
The expense ceilings include reductions at larger asset sizes to reflect
anticipated economies of scale as the Funds grow in size.
If, in any calendar quarter, the average net assets of each of the LARGE CAP
VALUE FUND or FLEX FUND are less than $500 million, each Fund's expenses shall
not exceed 1.55% for Class A and 2.20% for Class C; on the next $500 million of
net assets, expenses shall not exceed 1.50% for Class A and 2.15% for Class C;
on the next $1 billion of net assets, expenses shall not exceed 1.45% for Class
A and 2.10% for Class C; and on all assets over $2 billion, expenses shall not
exceed 1.40% for Class A and 2.05% for Class C. If, in any calendar quarter, the
average net assets of the MULTIFLEX FUND or INTERNATIONAL VALUE FUND are less
than $100 million, expenses shall not exceed 1.80% for Class A and 2.45% for
Class C; on the next $400 million of net assets, expenses shall not exceed 1.75%
for Class A and 2.40% for Class C; on the next $500 million, expenses shall not
exceed 1.70% for Class A and 2.35% for Class C; on the next $1 billion of net
assets, expenses shall not exceed 1.65% for Class A and 2.30% for Class C; and
on all assets over $2 billion, expenses shall not exceed 1.60% for Class A and
2.25% for Class C. If, in any calendar quarter, the average net assets of the
REAL ESTATE FUND are less than $500 million, expenses shall not exceed 1.70% for
Class A and 2.35% for Class C; on the next $500 million, expenses shall not
exceed 1.65% for Class A and 2.30% for Class C; and on all assets over $1
billion, expenses shall not exceed 1.60% for Class A and 2.25% for Class C.
24
<PAGE> 29
The Advisor and Sub-Advisors permit investment and other personnel to purchase
and sell securities for their own accounts, subject to a compliance policy
governing personal investing. This policy requires the Advisor's and
Sub-Advisors' personnel to conduct their personal investment activities in a
manner that the Advisor and Sub-Advisors believe is not detrimental to the Funds
or the Advisor's and Sub-Advisors' other advisory clients. See the Statement of
Additional Information for more detailed information.
DISTRIBUTOR. A I M Distributors, Inc., the Funds' distributor, a wholly owned
subsidiary of AIM, is the principal underwriter of the Company under a separate
Distribution Agreement (the "Distribution Agreement"). AIM Distributors is also
the principal underwriter for other investment companies and acts as agent upon
the receipt of orders from investors. AIM Distributors' principal office is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
AIM Distributors will be reimbursed for distribution-related expenses by each
of the Funds pursuant to the plans of distribution promulgated pursuant to Rule
12b-1 under the 1940 Act, as described under "Distribution Plan" herein and in
the Statement of Additional Information under "Distribution of Shares."
DISTRIBUTION PLAN. Rule 12b-1 under the 1940 Act ("Rule 12b-1") permits
investment companies to use their assets to bear expenses of distributing their
shares if they comply with various conditions. Pursuant to Rule 12b-1, each Fund
has adopted plans of distribution for each Class.
Class A Distribution Plan. The Class A Distribution Plan (the "Class A Plan")
provides that each Fund may make payments to AIM Distributors which may not
exceed a maximum annual rate of 0.35% of the average daily net assets of the
Funds attributable to Class A shares, to cover certain distribution and
shareholder service expenses. In general, these amounts up to a maximum annual
rate of 0.25% are used for the payment to broker-dealers (including, for this
purpose, certain other qualifying financial institutions) as a "service fee" for
providing account maintenance or personal service to existing shareholders. The
Directors are authorized to reduce the amount of payments or to suspend the Plan
for such periods as they may determine.
Class B Distribution Plan. The Class B Distribution Plan (the "Class B Plan")
provides that each Fund may make payments to AIM Distributors which may not
exceed a maximum daily rate of 1.00% of the Funds' average daily net assets
attributable to their respective Class B shares, to cover certain distribution
and shareholder service expenses. This expense includes payment calculated at an
annual rate of 0.25% of average annual net assets to broker-dealers as a
"service fee" for providing account maintenance or personal service to existing
shareholders.
Class C Distribution Plan. The Class C Distribution Plan (the "Class C Plan")
provides that each Fund may make payments to AIM Distributors which may not
exceed a maximum daily rate of 1.00% of the Funds' average daily net assets
attributable to their respective Class C shares, to cover certain distribution
and shareholder service expenses. This expense includes the payment calculated
at an annual rate of 0.25% of average annual net assets to broker-dealers as a
"service fee" for providing account maintenance or personal service to existing
shareholders. The Directors are authorized to reduce the amount of payments or
to suspend the Plan for such periods as they may determine.
All Plans. Activities that may be financed under the Class A Plan, Class B
Plan and Class C Plan (collectively, the "Plans") include, but are not limited
to: printing of prospectuses and statements of additional information and
reports for other than existing shareholders, overhead, preparation and
distribution of advertising material and sales literature, supplemental payments
to dealers and other institutions such as asset-based sales charges or as
payments of service fees under shareholder service arrangements, and the cost of
administering the Plans. These amounts payable by a Fund under the Plans need
not be directly related to the expenses actually incurred by AIM Distributors on
behalf of each Fund. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Company will
not be obligated to pay more than that fee, and if AIM Distributors' expenses
are less than the fee it receives, AIM Distributors will retain the full amount
of the fee. Payments pursuant to the Plans are subject to any applicable
limitations imposed by the rules of the National Association of Securities
Dealers, Inc. ("NASD").
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Certain financial institutions which have entered into service agreements and
which sell shares of the Fund on an agency basis may receive payments from the
Funds pursuant to the respective Plans. AIM Distributors does not act as
principal, but rather as agent, for the Funds in making such payments. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
GENERAL. AIM Distributors may suspend or modify the payments made to dealers
or other qualifying financial institutions under the Plans described above, and
such payments are subject to the continuation of the Distribution Plans by the
Directors, the terms of selling or shareholder servicing agreements between
dealers and AIM Distributors, and any applicable limits imposed by the NASD. For
additional information concerning the Fund's plans of distribution, see the
Statement of Additional Information under "Distribution of Shares."
25
<PAGE> 30
- --------------------------------------------------------------------------------
CAPITALIZATION
The authorized capital stock of the Company consists of 10,075,000,000 shares
of common stock having a par value of $0.001 per share. The authorized capital
stock of the Company has been classified as 300,000,000 shares of each of the
Funds. Authorized shares of each Fund are divided among Class A, Class B and
Class C shares, as follows:
<TABLE>
<CAPTION>
FUND NAME CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------- -------------- -------------- --------------
<S> <C> <C> <C>
LARGE CAP VALUE FUND...................................... 100,000,000 100,000,000 100,000,000
FLEX FUND................................................. 100,000,000 100,000,000 100,000,000
MULTIFLEX FUND............................................ 100,000,000 100,000,000 100,000,000
INTERNATIONAL VALUE FUND.................................. 100,000,000 100,000,000 100,000,000
REAL ESTATE FUND.......................................... 100,000,000 100,000,000 100,000,000
</TABLE>
The Company's Articles of Incorporation provide that the obligations and
liabilities of each Fund or class, as applicable, are restricted to the assets
of the particular Fund or class, as applicable, and generally do not extend to
the assets of the other Funds or classes of the Company.
There are no conversion or preemptive rights in connection with any shares of
the Company, nor are there cumulative voting rights with respect to the shares
of the Company. Each of the Funds' shares has equal voting rights, except that
only shares of the respective Fund or class are entitled to vote on matters
concerning only that Fund or class. (See, also, "Miscellaneous," below.) Each
class of shares is entitled to participate in dividends and distributions
declared by the respective Funds and in net assets of such Funds upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities applicable to each class, including distribution and shareholder
servicing charges.
All issued and outstanding shares of the Company will be fully paid and
nonassessable and will be redeemable at the net asset value per share (subject
to any applicable contingent deferred sales charge). Unless specifically
requested in writing by a shareholder, the interests of shareholders in the
Company will not be evidenced by a certificate or certificates representing
shares of the Company.
As of December 15, 1997, Merrill Lynch Pierce Fenner & Smith was the owner of
record of 62.434% of the outstanding Class A shares of FLEX FUND, and 54.049% of
the outstanding Class C shares of INTERNATIONAL VALUE FUND.
- --------------------------------------------------------------------------------
SHAREHOLDER REPORTS
Each Fund will issue to each of its shareholders semiannual and annual reports
containing each Fund's financial statements, including selected financial
highlights and a schedule of each Fund's portfolio securities. The federal
income tax status of shareholder distributions will also be reported to
shareholders after the end of each year.
Shareholders having any questions concerning any of the Funds may call AIM
Distributors. The toll-free telephone number is (800) 347-4246.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
From time to time the Fund may provide yield and total return figures for the
Funds and their classes in advertisements and in reports and other
communications to shareholders.
"Average annual total return" and "total return" figures represent the
increase (or decrease) in the value of an investment in the particular Fund and
class over a specified period. Both calculations assume that all income
dividends and capital gain distributions during the period are reinvested at net
asset value in additional shares of the class. Quotations of average annual
total return represent an average annual compounded rate of return on a
hypothetical investment in the Fund and class over a period of 1, 5, and 10
years ending on the most recent calendar quarter close. Quotations of total
return, which are not annualized, reflect actual earnings and asset value
fluctuations for the periods indicated. Both types of return are based on past
experience and do not guarantee future results.
Funds may provide quotations of "yield," "dividend yield," and "distribution
yield" for each class. Quotations of yield for these Funds will be based on all
investment income per share earned during a given 30-day period (including
dividends and interest), less expenses of the class accrued during the period
("net investment income"), and will be computed by dividing net investment
income by the maximum public offering price per share on the last day of the
period.
Dividend yield is a measure of investment return during a specified period
based on dividends actually paid by a class during that period. Dividend yield
is calculated by totaling the dividends paid by a class during the specified
period and dividing that sum by the net
26
<PAGE> 31
asset value per share of the class on the last day of the period. Where the
dividend yield is calculated for a period of less than a year, results may be
annualized. Distribution yield is computed in the same way, but includes
distributions paid from capital gains realized by the class, as well as
dividends from its net investment income.
Performance information for a Fund may be compared in advertisements, sales
literature, and reports to shareholders to: (i) unmanaged indices, such as the
S&P's 500 Stock Index, the Salomon Brothers Broad Investment Grade Bond Index,
the Morgan Stanley Capital International indices, the Dow Jones Industrial
Average, the Merrill Lynch 1 to 3 Year Treasury Index, the Salomon Brothers
World Government Benchmark Bond Index, the Lehman Brothers Municipal Bond Index,
the Lehman Brothers Aggregate Bond Index, the Lehman Brothers Government
Corporate Index and the NAREIT Equity Index; (ii) other groups of mutual funds
tracked by Lipper Analytical Services, a widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, or tracked by other services, companies, publications or persons who
rank mutual funds on overall performance or other criteria; and (iii) the
Consumer Price Index (measure for inflation) and other measures of the
performance of the economy to assess the real rate of return from an investment
in the Fund. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge. From time to time and in its
discretion, AIM or its affiliates may waive all or a portion of its advisory
fees and/or assume certain expenses of a Fund. Such a practice will have the
effect of increasing a Fund's total return.
- --------------------------------------------------------------------------------
MISCELLANEOUS
As stated above, the Funds are series of the Company. The Company, as a
Maryland corporation, is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing directors, changing fundamental policies or approving an advisory
contract, or as may be required by applicable law or the Company's Articles of
Incorporation or By-Laws. Meetings of shareholders will be called upon written
request of shareholders holding in the aggregate at least 10% of the Company's
outstanding shares. The Directors will provide appropriate assistance to
shareholders, in compliance with provisions of the 1940 Act, if such a request
for a meeting is received. Each shareholder receives one vote for each share
owned (with proportionate voting for fractional shares), except that only shares
of the respective Fund or class are entitled to vote on matters concerning only
that Fund or class and each Fund and class shall have separate voting rights on
matters as to which the interests of the Fund or class differ from the interests
of any other Fund or class, to the extent required by applicable law, regulation
and regulatory interpretation.
27
<PAGE> 32
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(*)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(*)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
MCF-AAF-12/97
A-1
<PAGE> 33
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-AAF-12/97
A-2
<PAGE> 34
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
ADV-PRO-1
MCF-AAF-12/97
A-3
<PAGE> 35
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
MCF-AAF-12/97
A-4
<PAGE> 36
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
MCF-AAF-12/97
A-5
<PAGE> 37
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
MCF-AAF-12/97
A-6
<PAGE> 38
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
MCF-AAF-12/97
A-7
<PAGE> 39
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
MCF-AAF-12/97
A-8
<PAGE> 40
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan a draft
is drawn on the shareholder's bank account in the amount specified by the
shareholder (minimum $50 per investment, per account) and on a day or date(s)
specified by the shareholder. The proceeds of the draft are invested in shares
of the designated AIM Fund at the applicable offering price determined on the
date of the draft. An Automatic Investment Plan may be discontinued upon 10
days' prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
MCF-AAF-12/97
A-9
<PAGE> 41
Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and
SEP plans (collectively, "retirement accounts"). Information concerning these
plans, including the custodian's fees and the forms necessary to adopt such
plans, can be obtained by calling or writing the AIM Funds or AIM Distributors.
Shares of the AIM Funds are also available for investment through existing
401(k) plans (for both individuals and employers) adopted under the Code. The
plan custodian currently imposes an annual $10 maintenance fee with respect to
each retirement account for which it serves as the custodian. This fee is
generally charged in December. Each AIM Fund and/or the custodian reserve the
right to change this maintenance fee and to initiate an establishment fee (not
to exceed its cost).
MCF-AAF-12/97
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<PAGE> 42
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<CAPTION>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
<S> <C> <C>
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES
VALUE FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS:
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A -------------
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
MCF-AAF-12/97
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<PAGE> 43
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
- ----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds...... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B.......... Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds...... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B.......... Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C.......... Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of
another Multiple Class Fund; (b) the dollar amount of the exchange must be at
least equal to the minimum investment applicable to the shares of the fund
acquired through such exchange; (c) the shares of the fund acquired through
exchange must be qualified for sale in the state in which the shareholder
resides; (d) the exchange must be made between accounts having identical
registrations and addresses; (e) the full amount of the purchase price for the
shares being exchanged must have already been received by the fund; (f) the
account from which shares have been exchanged must be coded as having a
certified taxpayer identification number on file or, in the alternative, an
appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received by the
fund; (g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten business days, and all other
shares are held in an account for at least one day, prior to the exchange; and
(h) certificates representing shares must be returned before shares can be
exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
MCF-AAF-12/97
A-12
<PAGE> 44
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-AAF-12/97
A-13
<PAGE> 45
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund to liquidate a shareholder's account if the aggregate net
asset value of shares held in the account is less than the designated minimum
account size described in the prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
MCF-AAF-12/97
A-14
<PAGE> 46
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of the Code, or Plans created
under Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a
letter of intent to invest at least $1,000,000 in one or more of the AIM Funds,
or (c) the shares being redeemed were purchased by an employer-sponsored Plan
with at least 100 eligible employees; provided, however, that Plans created
under Section 403(b) of the Code which are sponsored by public educational
institutions shall qualify under (a), (b) or (c) above on the basis of the value
of each Plan participant's aggregate investment in the AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible employees;
(2) redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
MCF-AAF-12/97
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request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
MCF-AAF-12/97
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<PAGE> 48
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-AAF-12/97
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<PAGE> 49
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares. Dividends on all shares may also be affected by other
class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
MCF-AAF-12/97
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<PAGE> 50
payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
MCF-AAF-12/97
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<PAGE> 51
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Texas Commerce Bank
National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-AAF-12/97
A-20
<PAGE> 52
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-AAF-12/97
B-1
<PAGE> 53
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-AAF-12/97
B-2
<PAGE> 54
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisors
INVESCO Capital Management, Inc.
1315 Peachtree Street, N.E.
Atlanta, GA 30309
INVESCO Management & Research, Inc.
101 Federal Street
Boston, MA 02110
INVESCO Realty Advisors, Inc.
One Lincoln Centre, Suite 1200
5400 LBJ Freeway/LB-2
Dallas, TX 75240
INVESCO Global Asset Management Limited
Cedar House
41 Cedar Avenue
Hamilton, HM12 Bermuda
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street, Suite 2500
Denver, Colorado 80202
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please
call (800) 347-4246 or write to A I M Distributors, Inc. and request
a free prospectus. Please read the prospectus carefully before you
invest or send money.
<PAGE> 55
STATEMENT OF
ADDITIONAL INFORMATION
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP VALUE FUND
AIM ADVISOR MULTIFLEX FUND
AIM ADVISOR REAL ESTATE FUND
(SERIES PORTFOLIOS OF AIM ADVISOR FUNDS, INC.)
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
-----------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS,
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS
OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739,
OR BY CALLING (800) 347-4246
-----------------
Statement of Additional Information Dated: March 3, 1998
Relating to the Prospectus Dated: March 3, 1998
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION ............................................................ 1
GENERAL INFORMATION ABOUT THE COMPANY ................................... 1
The Company and its Shares ..................................... 1
INVESTMENT OBJECTIVES AND POLICIES ...................................... 2
Convertible Securities ......................................... 2
Options ........................................................ 2
Combined Option Positions ...................................... 3
Futures Contracts .............................................. 3
Options on Futures Contracts ................................... 4
Risks as to Futures Contracts and Related Options .............. 4
Securities Issued on a When-Issued or Delayed Delivery Basis ... 5
Mortgage-Related Securities .................................... 5
INVESTMENT RESTRICTIONS ................................................. 8
PORTFOLIO SECURITIES LOANS .............................................. 10
MANAGEMENT OF THE COMPANY ............................................... 10
Directors and Officers ......................................... 10
Remuneration of Directors ...................................... 15
AIM Funds Retirement Plan for Eligible Directors/Trustees ...... 16
Deferred Compensation Agreements ............................... 17
THE ADVISORY AND SUB-ADVISORY AGREEMENTS ................................ 18
OPERATING SERVICES AGREEMENT ............................................ 20
THE DISTRIBUTOR ......................................................... 21
DISTRIBUTION OF SHARES .................................................. 21
Class A Distribution Plan ...................................... 22
Class B Distribution Plan ...................................... 22
Class C Distribution Plan ...................................... 22
DISTRIBUTIONS AND TAX INFORMATION ....................................... 25
Distributions .................................................. 25
Federal Taxes .................................................. 26
Options, Futures and Foreign Currency Forward Contracts ........ 27
Swap Agreements ................................................ 27
Currency Fluctuations -- "Section 988" Gains or Losses ......... 28
Investment in Passive Foreign Investment Companies ............. 28
Debt Securities Acquired at a Discount ......................... 28
Distributions .................................................. 29
Disposition of Shares .......................................... 29
Backup Withholding ............................................. 30
Other Taxation ................................................. 30
</TABLE>
i
<PAGE> 57
<TABLE>
<CAPTION>
<S> <C>
BROKERAGE AND PORTFOLIO TRANSACTIONS .................................... 30
REDEMPTIONS ............................................................. 32
PERFORMANCE INFORMATION ................................................. 33
MISCELLANEOUS ........................................................... 36
Principal Shareholders ......................................... 36
Computation of Net Asset Value ................................. 38
The Custodian .................................................. 39
Independent Accountants ........................................ 39
APPENDIX ................................................................ 40
FINANCIAL STATEMENTS .................................................... FS
</TABLE>
ii
<PAGE> 58
INTRODUCTION
AIM Advisor Funds, Inc. (INVESCO Advisor Funds, Inc. prior to August
4, 1997) (the "Company") is a series mutual fund. The rules and regulations of
the United States Securities and Exchange Commission (the "SEC") require all
mutual funds to furnish prospective investors certain information concerning
the activities of the fund being considered for investment. This information,
which relates to the following portfolios of the Company: AIM ADVISOR FLEX FUND
(formerly, INVESCO Flex Portfolio), AIM ADVISOR INTERNATIONAL VALUE FUND
(formerly, INVESCO International Value Portfolio), AIM ADVISOR LARGE CAP VALUE
FUND (formerly, INVESCO Equity Portfolio), AIM ADVISOR MULTIFLEX FUND
(formerly, INVESCO MultiFlex Portfolio), and AIM ADVISOR REAL ESTATE FUND
(formerly, INVESCO Real Estate Portfolio) (individually, a "Fund" and
collectively, the "Funds"), is included in a Prospectus, dated March 3, 1998
(the "Prospectus"). Copies of the Prospectus and additional copies of this
Statement of Additional Information may be obtained without charge by writing
the principal distributor of the Company's shares, A I M Distributors, Inc.
("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling
(800) 347-4246. Investors must receive a Prospectus before they invest in the
Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some of
the information required to be in this Statement of Additional Information is
also included in the Funds' current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed
with the SEC. Copies of the Registration Statement, including items omitted
from the Prospectus and this Statement of Additional Information, may be
obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1989 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of five separate portfolios: AIM ADVISOR FLEX
FUND (the "Flex Fund"), AIM ADVISOR INTERNATIONAL VALUE FUND (the
"International Value Fund"), AIM ADVISOR LARGE CAP VALUE FUND (the "Large Cap
Value Fund") and AIM ADVISOR MULTIFLEX FUND (the "MultiFlex Fund") and AIM
ADVISOR REAL ESTATE FUND (the "Real Estate Fund"). Each portfolio of the
Company offers Class A, Class B and Class C shares. This Statement of
Additional Information and the associated Prospectus relate solely to the
Funds.
Effective August 4, 1997, A I M Advisors, Inc. ("AIM" or "Advisor")
became the investment advisor for the Funds pursuant to an investment advisory
agreement with terms substantially identical to those of the company's prior
investment advisory contracts with INVESCO Services, Inc. ("ISI"). The
sub-advisors did not change other than the substitution of IGAM for ICM as
sub-advisor to INTERNATIONAL VALUE FUND.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
<PAGE> 59
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the class of such Fund and, upon liquidation of the Fund, to participate
proportionately in the net assets of the Fund allocable to such class remaining
after satisfaction of the Fund's outstanding liabilities of the Fund allocable
to such class. Fractional shares have proportionately the same rights,
including voting rights, as are provided for full shares.
INVESTMENT OBJECTIVES AND POLICIES
The following discussion elaborates on the disclosure of the Funds'
investment policies contained in the Prospectus.
CONVERTIBLE SECURITIES
Although the equity investments of the INTERNATIONAL VALUE FUND
consist primarily of common and preferred stocks, the Fund may buy securities
convertible into common stock if, for example, the sub-adviser believes that a
company's convertible securities are undervalued in the market. Convertible
securities eligible for purchase by the Fund include convertible bonds,
convertible preferred stocks, and warrants. A warrant is an instrument issued
by a corporation which gives the holder the right to subscribe to a specific
amount of the corporation's capital stock at a set price for a specified period
of time. Warrants do not represent ownership of the securities, but only the
right to buy the securities. The prices of warrants do not necessarily move
parallel to the prices of underlying securities. Warrants may be considered
speculative in that they have no voting rights, pay no dividends, and have no
rights with respect to the assets of a corporation issuing them. Warrant
positions will not be used to increase the leverage of the Fund; consequently,
warrant positions are generally accompanied by cash positions equivalent to the
required exercise amount.
OPTIONS
Each of the Funds is authorized to write (sell) covered call options
on the securities in which it may invest and to enter into closing purchase
transactions with respect to such options. Writing a call option obligates a
Fund to sell or deliver the option's underlying security, in return for the
strike price, upon exercise of the option. By writing a call option, the Fund
receives an option premium from the purchaser of the call option. Writing
covered call options is generally a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, the Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, the Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price. In addition, the Fund's ability to sell the underlying security
will be limited while the option is in effect unless the Fund effects a closing
purchase transaction.
Each Fund may purchase put options. A put purchased by the Fund
constitutes a hedge against a decline in the price of a security owned by the
Fund. It may be sold at a profit or loss depending upon changes in the price of
the underlying security. It may be exercised at a profit provided that the
amount of the decline in the price of the underlying security below the
exercise price during the option period exceeds the option premium, or it may
expire without value. A call constitutes a hedge against an increase in the
price of a security which the Fund has sold short. It may be sold at a profit
or loss depending upon changes in the price of the underlying security, it may
be exercised at a profit provided that the amount of the increase in the price
of the underlying security over the exercise price during the option period
exceeds the option premium, or it may expire without value. The maximum loss
exposure involved in the purchase of an option is the cost of the option
contract. A Fund may engage in strategies employing combinations of covered put
and call options.
2
<PAGE> 60
COMBINED OPTION POSITIONS
Each Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of
the Fund's overall position. For example, the Fund may purchase a put option
and write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. This technique, called a "straddle," enables the
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, the Fund
gives up the ability for potentially unlimited profit from the put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
FUTURES CONTRACTS
Each of the Funds may purchase and sell futures contracts in order to
hedge the value of its portfolio against changes in market conditions. In cases
of purchases of futures contracts, an amount of liquid assets, equal to the
cost of the futures contracts (less any related margin deposits), will be
segregated with the Funds' custodian to collateralize the position and ensure
that the use of such futures contracts is unleveraged. Unlike when a Fund
purchases or sells a security, no price is paid or received by a Fund upon the
purchase or sale of a futures contract. Initially, a Fund will be required to
deposit with its custodian for the account of the broker a stated amount, as
called for by the particular contract, of cash or U.S. Treasury bills. This
amount is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in
that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
"variation margin," to and from the broker will be made on a daily basis as the
price of the futures contract fluctuates making the long and short positions in
the futures contract more or less valuable, a process known as
"marking-to-market." For example, when a Fund has purchased a stock index
futures contract and the price of the underlying stock index has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment with respect to that increase in value. Conversely,
where a Fund has purchased a stock index futures contract and the price of the
underlying stock index has declined, that position would be less valuable and
the Fund would be required to make a variation margin payment to the broker.
Variation margin payments would be made in a similar fashion when a Fund has
purchased an interest rate futures contract. At any time prior to expiration of
the futures contract, a Fund may elect to close the position by taking an
opposite position which will operate to terminate the Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund and the Fund
realizes a loss or gain.
A description of the various types of futures contracts that may be
utilized by the Funds is as follows:
Stock Index Futures Contracts
A stock index assigns relative values to the common stocks included in
the index and the index fluctuates with changes in the market values of the
common stocks so included. A stock index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract is originally struck. No physical delivery of the
underlying stocks in the index is made. Currently, stock index futures
contracts can be purchased or sold
3
<PAGE> 61
primarily with respect to broad based stock indices such as the Standard &
Poor's 500 Stock Index, the New York Stock Exchange Composite Index, the
American Stock Exchange Major Market Index, the NASDAQ -- 100 Stock Index and
the Value Line Stock Index. The stock indices listed above consist of a
spectrum of stocks not limited to any one industry. The Funds will only enter
into stock index futures contracts in order to hedge the value of its portfolio
against changes in market conditions. When a Fund anticipates a significant
market or market sector advance, the purchase of a stock index futures contract
affords a hedge against not participating in such advance. Conversely, in
anticipation of or in a general market or market sector decline that adversely
affects the market values of a Fund's portfolio of securities, the Fund may
sell stock index futures contracts.
Foreign Currency Futures Contracts
A Fund may also use futures contracts to hedge the risk of changes in
the exchange rate of foreign currencies.
OPTIONS ON FUTURES CONTRACTS
Each Fund may purchase options on futures contracts. An option on a
futures contract gives 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 option exercise period. The writer of the option is
required upon exercise to assume an offsetting futures position (a short
position if the option is a call and a long 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 assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract. If an option on
a futures contract is exercised on the last trading date prior to the
expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the
closing price of the futures contract on the expiration date.
A Fund will purchase put options on futures contracts to hedge against
the risk of falling prices for their respective portfolio securities. A Fund
will purchase call options on futures contracts as a hedge against a rise in
the price of securities which it intends to purchase. Options on futures
contracts may also be used to hedge the risks of changes in the exchange rate
of foreign currencies. The purchase of a put option on a futures contract is
similar to the purchase of protective put options on a portfolio security or a
foreign currency. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security or a foreign currency. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or the price
of the underlying securities or currency, it may or may not be less risky than
ownership of the futures contract or underlying securities or currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS
There are several risks in connection with the use of futures
contracts and related options as hedging devices. One risk arises because of
the imperfect correlation between movements in the price of hedging instruments
and movements in the price of the stock, debt security or foreign currency
which are the subject of the hedge. If the price of a hedging instrument moves
less than the price of the stock, debt security or foreign currency which is
the subject of the hedge, the hedge will not be fully effective. If the price
of a hedging instrument moves more than the price of the stock, debt security
or foreign currency, a Fund will experience either a loss or gain on the
hedging instrument which will not be completely offset by movements in the
price of the stock, debt security or foreign currency which is the subject of
the hedge. The use of options on futures
4
<PAGE> 62
contracts involves the additional risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
option.
Successful use of hedging instruments by the Funds is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market, of interest rates or of foreign exchange rates. Because of possible
price distortions in the futures and options markets and because of the
imperfect correlation between movements in the prices of hedging instruments
and the investments being hedged, even a correct forecast by AIM of general
market trends may not result in a completely successful hedging transaction.
It is also possible that where a Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in its portfolio may decline. If
this occurred, a Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Funds intend to
purchase or sell futures contracts there is no assurance that a liquid market
on an exchange or a board of trade will exist for any particular contract at
any particular time. If there is not a liquid market, it may not be possible to
close a futures position or purchase an option at such time. In the event of
adverse price movements under those circumstances, the Fund would continue to
be required to make daily cash payments of maintenance margin on its futures
positions. The extent to which a Fund may engage in futures contracts or
related options, will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and a Fund's intent to continue
to qualify as such. The result of a hedging program cannot be foreseen and may
cause a Fund to suffer losses which it would not otherwise sustain.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Investment in securities on a when-issued or delayed delivery basis may
increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate liquid assets in an amount equal to the
when-issued commitment. If the market value of such securities declines,
additional liquid assets will be segregated on a daily basis so that the market
value of the segregated assets will equal the amount of the Fund's when-issued
commitments. To the extent liquid assets are segregated, they will not be
available for new investments or to meet redemptions. Securities purchased on a
delayed delivery basis may require a similar segregation of liquid assets.
MORTGAGE-RELATED SECURITIES
Mortgage-related securities are interests in pools of mortgage loans
made to residential home buyers, including mortgage loans made by savings and
loan institutions, mortgage bankers, commercial banks and others. Pools of
mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations (see "Mortgage
Pass-Through Securities" below). The Funds may also invest in debt securities
which are secured with collateral consisting of mortgage-related securities
(see "Collateralized Mortgage Obligations"), and in other types of
mortgage-related securities.
MORTGAGE PASS-THROUGH SECURITIES. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
5
<PAGE> 63
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential or
commercial mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Additional payments are caused by repayments of principal
resulting from the sale of the underlying property, refinancing or foreclosure,
net of fees or costs which may be incurred. Some mortgage-related securities
(such as securities issued by the Government National Mortgage Association
("GNMA")) are described as "modified pass-through." These securities entitle
the holder to receive all interest and principal payments owed on the mortgage
pool, net of certain fees, at the scheduled payment dates regardless of whether
or not the mortgagor actually makes the payment.
GNMA is the principal governmental guarantor of mortgage-related
securities. GNMA is a wholly owned U.S. government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the U.S. government, the timely payment of
principal and interest on securities issued by institutions approved by GNMA
(such as savings and loan institutions, commercial banks and mortgage bankers)
and backed by pools of FHA-insured or VA-guaranteed mortgages.
Government-related guarantors (i.e., not backed by the full faith and
credit of the U.S. government) include the Fannie Mae (formerly, the Federal
National Mortgage Association ("FNMA"), and prior thereto, the Federal Home
Loan Mortgage Corporation ("FHLMC")). Fannie Mae is a government-sponsored
corporation owned entirely by private stockholders. It is subject to general
regulation by the Secretary of Housing and Urban Development. Fannie Mae
purchases conventional (i.e., not insured or guaranteed by any government
agency) residential mortgages from a list of approved seller/servicers which
include state and federally chartered savings and loan associations, mutual
savings banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities issued by Fannie Mae are guaranteed as to timely
payment of principal and interest by Fannie Mae but are not backed by the full
faith and credit of the U.S. government.
FHLMC was created by Congress in 1970 for the purpose of increasing
the availability of mortgage credit for residential housing. It is a
government-sponsored corporation formerly owned by the 12 Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues
Participation Certificates ("PCs") which represent interests in conventional
mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment
of interest and ultimate collection of principal, but PCs are not backed by the
full faith and credit of the U.S. government.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Such
issuers may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage-related securities.
Pools created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and
guarantees are issued by governmental entities, private insurers and the
mortgage poolers. Such insurance and guarantees and the creditworthiness of the
issuers thereof will be considered in determining whether a mortgage-related
security meets a Fund's investment quality standards. There can be no assurance
that the private insurers or guarantors can meet their obligations under the
insurance policies or guarantee arrangements. Although the market for such
securities is becoming increasingly liquid, securities issued by certain
private organizations may not be readily marketable. A Fund will not purchase
mortgage-related securities or other assets which in the sub-adviser's opinion
are illiquid if, as a result, more than 15% of the value of the Fund's total
assets will be illiquid.
6
<PAGE> 64
Mortgage-backed securities that are issued or guaranteed by the U.S.
government, its agencies or instrumentalities, are not subject to a Fund's
industry concentration restrictions, by virtue of the exclusion from that test
available to all U.S. Government securities. In the case of privately issued
mortgage-related securities, the Portfolios take the position that
mortgage-related securities do not represent interests in any particular
"industry" or group of industries. The assets underlying such securities may be
represented by a portfolio of first lien residential mortgages (including both
whole mortgage loans and mortgage participation interests) or portfolios of
mortgage pass-through securities issued or guaranteed by GNMA, Fannie Mae or
FHLMC. Mortgage loans underlying a mortgage-related security may in turn be
insured or guaranteed by the Federal Housing Administration or the Department
of Veterans Affairs. In the case of private issue mortgage-related securities
whose underlying assets are neither U.S. government securities nor U.S.
government-insured mortgages, to the extent that real properties securing such
assets may be located in the same geographical region, the security may be
subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect
such region and, ultimately, the ability of residential homeowners to make
payments of principal and interest on the underlying mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). A CMO is a hybrid
between a mortgage-backed bond and a mortgage pass-through security. Similar to
a bond, interest and prepaid principal is paid, in most cases, semiannually.
CMOs may be collateralized by whole mortgage loans, but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. CMOs provide for a modified form of
call protection through a de facto breakdown of the underlying pool of
mortgages according to how quickly the loans are repaid. Monthly payment of
principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity
class. Investors holding the longer maturity classes receive principal only
after the first class has been retired. An investor is partially guarded
against a sooner than desired return of principal because of the sequential
payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and
added to principal and a like amount is paid as principal on the Series A, B,
or C Bond currently being paid off. When the Series A, B, and C Bonds are paid
in full, interest and principal on the Series Z Bond begins to be paid
currently. With some CMOs, the issuer serves as a conduit to allow loan
originators (primarily builders or savings and loan associations) to borrow
against their loan portfolios.
FHLMC CMOs. FHLMC CMOs are debt obligations of FHLMC issued in
multiple classes having different maturity dates which are secured by the
pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike
FHLMC PCs, payments of principal and interest on the CMOs are made
semiannually, as opposed to monthly. The amount of principal payable on each
semiannual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which, in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's
minimum sinking fund obligation for any payment date are paid to the holders of
the CMOs as additional sinking fund payments. Because of the "pass-through"
nature of all principal payments received on the collateral pool in excess of
FHLMC's minimum sinking fund requirement, the rate at which principal of the
7
<PAGE> 65
CMOs is actually repaid is likely to be such that each class of bonds will be
retired in advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage
loans during any semiannual payment period is not sufficient to meet FHLMC's
minimum sinking fund obligation on the next sinking fund payment date, FHLMC
agrees to make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCs. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.
INVESTMENT RESTRICTIONS
The Directors of the Company, on behalf of the Funds, have adopted the
following investment restrictions, all of which are fundamental policies and
may not be changed as to any Fund without the approval of the holders of a
majority of such Fund's outstanding voting securities. The Funds may not:
(1) Invest in the securities of issuers conducting their principal
business activity in the same industry, if immediately after such investment
the value of a Fund's investments in such industry would exceed 25% of the
value of such Fund's total assets; provided, however, that this limitation does
not apply to a Fund's investments in obligations issued or guaranteed by the
U.S. government, its agencies, authorities or instrumentalities.
(2) For the MULTIFLEX FUND, REAL ESTATE FUND AND INTERNATIONAL VALUE
FUND, with respect to 75% of the Fund's assets, invest in the securities of any
one issuer, other than obligations of, or guaranteed by, the U.S. government,
its agencies, authorities or instrumentalities, if immediately after such
investment more than 5% of the value of the Fund's total assets, taken at
market value, would be invested in such issuer or more than 10% of such
issuer's outstanding voting securities would be owned by such Fund. For the
LARGE CAP VALUE FUND and FLEX FUND, with respect to 100% of the Fund's assets,
invest in the securities of any one issuer, other than obligations of, or
guaranteed by, the U.S. government, its agencies, authorities or
instrumentalities, if immediately after such investment more than 5% of the
value of the Fund's total assets, taken at market value, would be invested in
such issuer or more than 10% of such issuer's outstanding voting securities
would be owned by such Fund.
(3) Underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the Securities Act of 1933, as
amended, in connection with the disposition of a Fund's portfolio securities.
(4) Invest in companies for the purpose of exercising control or
management.
(5) Issue any class of senior securities or borrow money, except
borrowings from banks for temporary or emergency purposes not in excess of 5%
of the value of a Fund's total assets at the time the borrowing is made.
(6) Mortgage, pledge, hypothecate or in any manner transfer as
security for indebtedness any securities owned or held except to an extent not
greater than 5% of the value of a Fund's total assets.
(7) Make short sales of securities or maintain a short position. All
Funds may, however, purchase or sell options on futures and write, purchase and
sell puts and calls.
8
<PAGE> 66
(8) Purchase securities on margin, except that a Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities.
(9) Purchase or sell real estate or interests in real estate. A Fund
may invest in securities secured by real estate or interests therein or issued
by companies, including real estate investment trusts, which invest in real
estate or interests therein.
(10) Purchase or sell commodities or commodity contracts, except as
set forth in the Prospectus and in this Statement of Additional Information for
purchases and sales of options and futures, and options or futures on
underlying financial instruments.
(11) Make loans to other persons, provided that a Portfolio may
purchase debt obligations consistent with its investment objectives and
policies and may lend limited amounts (not to exceed 10% of total assets) of
its portfolio securities to broker-dealers or other institutional investors.
(12) Purchase securities of other investment companies except (a) in
connection with a merger, consolidation, acquisition or reorganization; or (b)
by purchase in the open market of securities of other investment companies
involving only customary brokers' commissions and only if immediately
thereafter (i) no more than 3% of the voting securities of any one investment
company are owned by the Fund, (ii) no more than 5% of the value of the total
assets of a Fund would be invested in any one investment company, and (iii) no
more than 10% of the value of the total assets of a Fund would be invested in
the securities of such investment companies. A portion of a Fund's cash may be
invested from time to time in investment companies to which the Advisor or
sub-advisor serves as investment advisor; provided that no management or
distribution fee will be charged by the Advisor or sub-advisor with respect to
any such assets so invested and provided further that at no time will more than
3% of the Fund's assets be so invested. Should a Fund purchase securities of
other investment companies, shareholders may incur additional management,
advisory and distribution fees.
(13) Invest in securities for which there are legal or contractual
restrictions on resale, if more than 2% of the value of a Fund's total assets
would be invested in such securities, or invest in securities for which there
is no readily available market, if more than 5% of the value of a Fund's total
assets would be invested in such securities. In determining securities subject
to this 5% restriction, the Funds will include repurchase agreements maturing
in more than seven days.
Additional investment restrictions adopted by the Directors on behalf
of the Funds, which may be changed by the Directors at their discretion,
provide that the Funds may not:
(1) For the LARGE CAP VALUE FUND, FLEX FUND and REAL ESTATE FUND,
invest more than 10% of the value of the applicable Fund's total assets
directly in foreign securities, including unsponsored ADRs. Up to 25% of the
total assets of the LARGE CAP VALUE FUND may be invested in securities of
Canadian issuers and sponsored ADRs. The MULTIFLEX FUND may invest up to 40% of
total assets in securities of foreign issuers. Securities of Canadian issuers
and securities purchased by means of sponsored ADRs are not subject to this 40%
limitation. The INTERNATIONAL VALUE FUND may invest up to 100% of its total
assets in securities of foreign issuers.
(2) Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except as set forth in the Prospectus and this Statement
of Additional Information for transactions in options, futures, and options on
futures and transactions arising under swap agreements. Options on interest
rate futures contracts and investments in initial margins will not exceed 5% of
the applicable Fund's total assets. Covered call options and cash secured puts
will not exceed 25% of the applicable Fund's total assets. For a detailed
discussion on these types of instruments, see the Prospectus.
9
<PAGE> 67
(3) Engage in arbitrage transactions.
PORTFOLIO SECURITIES LOANS
Each of the Funds may lend limited amounts of Fund securities (not to
exceed 10% of total assets) to broker-dealers or other institutional investors.
The sub-advisors will monitor the creditworthiness of such broker-dealers in
accordance with procedures adopted by the Directors. Fund Management
understands that it is the current view of the staff of the SEC that the Funds
are permitted to engage in loan transactions only if the following conditions
are met: (1) the applicable Fund must receive 100% collateral in the form of
cash or U.S. government securities, e.g., U.S. Treasury bills or notes, from
the borrower; (2) the borrower must increase the collateral whenever the market
value of the borrowed securities (determined on a daily basis) rises above the
level of the collateral; (3) the applicable Fund must be able to terminate the
loan after notice; (4) the applicable Fund must receive reasonable interest on
the loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest or other distributions on the securities loaned and any
increase in market value; (5) the applicable Fund may pay only reasonable
custodian fees in connection with the loan; and (6) voting rights on the
securities loaned may pass to the borrower; however, if a material event
affecting the investment occurs, the Fund must be able to terminate the loan
and vote proxies or enter into an alternative arrangement with the borrower to
enable the Fund to vote proxies. Excluding items (1) and (2), these practices
may be amended from time to time as regulatory provisions permit.
While there may be delays in recovery of loaned securities or even a
loss of rights in collateral supplied should the borrower fail financially,
loans will be made only to firms deemed by the sub-advisers to be of good
standing and will not be made unless, in the judgment of the respective
sub-adviser, the consideration to be earned from such loans would justify the
risk.
It is expected that each of the Funds will use the cash portions of
loan collateral to invest in short-term income producing securities for such
Fund's account and that such Fund may share some of the income from these
investments with the borrower.
MANAGEMENT OF THE COMPANY
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below.
10
<PAGE> 68
<TABLE>
<CAPTION>
====================================================================================================================
Positions Held with Principal Occupation During, At Least,
Name, Address and Age Registrant The Past 5 Years
====================================================================================================================
<S> <S> <S>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors,
11 Greenway Plaza, Suite 100 Chairman A I M Management Group Inc., A I M Advisors,
Houston, TX 77046 Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and
Fund Management Company; and Vice Chairman and
Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation and Chairman, Board
of Governors of INTELSAT (international
communications company.)
- --------------------------------------------------------------------------------------------------------------------
OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
- --------------------------------------------------------------------------------------------------------------------
JACK FIELDS (45) Director Chief Executive Officer, Texana Global, Inc.
Texana Global, Inc. Formerly, Member of the U. S. House of
Jetero Plaza, Suite E Representatives.
8810 Will Clayton Parkway
Humble, Texas 77338
- --------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Director, ERD Waste, Inc. (waste
New York, NY 10022 management company), Aegis Consumer Finance (auto
leasing company) and Lazard Funds, Inc.
(investment companies). Formerly, Partner, Reid
& Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law
firm).
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
** A director who is an "interested person" of the Company as defined in the
1940 Act.
11
<PAGE> 69
<TABLE>
<CAPTION>
====================================================================================================================
Positions Held with Principal Occupation During, At Least,
Name,Address and Age Registrant the Past 5 Years
====================================================================================================================
<S> <C> <C>
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive Officer,
11 Greenway Plaza, Suite 100 President A I M Management Group Inc.; Director and
Houston, TX 77046 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., A I M Institutional Fund
Services, Inc. and Fund Management Company;
Director, AMVESCAP PLC; Chairman of the Board of
Directors and President, INVESCO Holdings Canada
Inc.; and Director, AIM Funds Group Canada Inc.
and INVESCO G.P. Canada Inc.
- --------------------------------------------------------------------------------------------------------------------
JOHN F. KROEGER (73) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund, Inc.,
Morristown, NJ 07960 Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total
Return U.S. Treasury Fund, Inc., Flag Investors
Intermediate Term Income Fund, Inc., Managed
Municipal Fund, Inc., Flag Investors Value
Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag
Investors Real Estate Securities Fund, Inc.,
Alex. Brown Cash Reserve Fund, Inc. and North
American Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
- --------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (55) Director Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
12
<PAGE> 70
<TABLE>
====================================================================================================================
Positions Held with Principal Occupation During, At Least,
Name, Address and Age Registrant the Past 5 Years
====================================================================================================================
<S> <C> <C>
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice
President and Chief Financial Officer, Bell
Telephone Company of Pennsylvania and Diamond
State Telephone Company.
- --------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
- --------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer,
11 Greenway Plaza, Suite 100 President and A I M Advisors, Inc.; and Vice President and
Houston, TX 77046 Treasurer Treasurer, A I M Management Group Inc.,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and
Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital Management,
11 Greenway Plaza, Suite 100 President Inc.; Director and Senior Vice President,
Houston, TX 77046 A I M Management Group Inc. and A I M Advisors,
Inc.; and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
*** Mr. Arthur and Ms. Relihan are married to each other.
13
<PAGE> 71
<TABLE>
====================================================================================================================
Positions Held with Principal Occupation During, At Least,
Name, Address and Age Registrant the Past 5 Years
====================================================================================================================
<S> <C> <C>
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General Counsel
11 Greenway Plaza, Suite 100 President and and Secretary, A I M Advisors, Inc.; Vice
Houston, TX 77046 Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; General Counsel and Vice President,
A I M Fund Services, Inc. and A I M Institutional
Fund Services, Inc.; and Vice President,
A I M Capital Management, Inc. and
A I M Distributors, Inc.
- --------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (38) Vice President and Vice President and Fund Controller,
11 Greenway Plaza, Suite 100 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
- --------------------------------------------------------------------------------------------------------------------
ROBERT G. ALLEY (49) Vice President Senior Vice President, A I M Capital Management,
11 Greenway Plaza, Suite 100 Inc.; and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------
STUART W. COCO (42) Vice President Senior Vice President, A I M Capital Management,
11 Greenway Plaza, Suite 100 Inc.; and Vice President, A I M Advisors, Inc.
Houston, TX 77046
- --------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance
11 Greenway Plaza, Suite 100 Officer, A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (37) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President, A I M
Houston, TX 77046 Advisors, Inc.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
*** Mr. Arthur and Ms. Relihan are married to each other
14
<PAGE> 72
<TABLE>
<CAPTION>
====================================================================================================================
Positions Held with Principal Occupation During, At Least,
Name,Address and Age Registrant the Past 5 Years
====================================================================================================================
<S> <C> <C>
JONATHAN C. SCHOOLAR (36) Vice President Director and Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
====================================================================================================================
</TABLE>
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. The Audit
Committee is responsible for meeting with the Company's auditors to review
audit procedures and results and to consider any matters arising from an audit
to be brought to the attention of the directors as a whole with respect to the
Company's fund accounting or its internal accounting controls, and for
considering such matters as may from time to time be set forth in a charter
adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as directors who are not
interested persons as long as the Company maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the
compensation payable to the disinterested directors, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his services according
to a fee schedule which recognizes the fact that such director also serves as a
director or trustee of other mutual funds advised by AIM as well as a director
of the Funds (collectively, the "AIM Funds"). Each such director receives a
fee, allocated among the AIM Funds for which he serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
15
<PAGE> 73
Set forth below is information regarding compensation paid or accrued
for each director of the Company:
<TABLE>
<CAPTION>
====================================================================================================================
DIRECTOR ESTIMATED RETIREMENT TOTAL
COMPENSATION BENEFITS COMPENSATION
FROM COMPANY(1) ACCRUED FROM ALL AIM FUNDS(2)
BY ALL AIM
FUNDS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett
- --------------------------------------------------------------------------------------------------------------------
Owen Daly II
- --------------------------------------------------------------------------------------------------------------------
Jack Fields
- --------------------------------------------------------------------------------------------------------------------
Carl Frischling(3)
- --------------------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- --------------------------------------------------------------------------------------------------------------------
John F. Kroeger
- --------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock
- --------------------------------------------------------------------------------------------------------------------
Ian W. Robinson
- --------------------------------------------------------------------------------------------------------------------
Louis S. Sklar
====================================================================================================================
</TABLE>
- ------------------
(1) Figures estimate what would have been paid for the calendar year ended
December 31, 1997 based on rates applicable for that year [modified to reflect
changes in director compensation for the AIM Funds approved in March 1997.]
(2) Each Director serves as director or trustee of the 12 registered
investments companies advised by AIM (comprised of 54 portfolios). Data reflect
total compensation earned during the calendar year ended December 31, 1997.
Does not include accrued retirement benefits or earnings on deferred
compensation.
(3) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel $_____ in
legal fees for services provided to the Funds, during the fiscal year ending
December 31, 1997. Mr. Frischling is a partner in such firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the Applicable AIM Funds for such director during
the twelve-month period immediately preceding the director's retirement
(including amounts deferred under a separate agreement between the Applicable
AIM
16
<PAGE> 74
Funds and the director) for the number of such director's years of service (not
in excess of 10 years of service) completed with respect to any of the
Applicable AIM Funds. Such benefit is payable to each eligible director in
quarterly installments. If an eligible director dies after attaining the normal
retirement date but before receipt of any benefits under the Plan commences, the
director's surviving spouse (if any) shall receive a quarterly survivor's
benefit equal to 50% of the amount payable to the deceased director for no more
than ten years beginning the first day of the calendar quarter following the
date of the director's death. Payments under the Plan are not secured or funded
by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock,
Robinson and Sklar are [10, 10, 0, 20, 19, 15, 10 and 7] years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
=======================================================
Number of Years Annual Retainer
of Service with Paid By All AIM Funds
the AIM Funds
====================================
<S> <C>
$80,000
=======================================================
10 $60,000
=======================================================
9 $54,000
=======================================================
8 $48,000
=======================================================
7 $42,000
=======================================================
6 $36,000
=======================================================
5 $30,000
=======================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will be
paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the Agreement) beginning on the date the
deferring director's retirement benefits commence under the Plan. The Company's
Board of Directors, in its sole discretion, may accelerate or extend the
distribution of such deferral accounts after the deferring director's
termination of service as a director of the Company. If a deferring director
dies prior to the distribution of amounts in his deferral account, the balance
of the deferral account will be distributed to his designated beneficiary in a
single lump sum payment as soon as practicable after such deferring director's
death. The Agreements are not funded and, with respect to the payments of
amounts held in the deferral accounts, the deferring directors have the status
of unsecured creditors of the Company and of each other AIM Fund from which they
are deferring compensation.
17
<PAGE> 75
THE ADVISORY AND SUB-ADVISORY AGREEMENTS
The investment advisor to the Company is A I M Advisors, Inc., which
has its principal office at 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
AIM is a direct wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management") and is the sole shareholder of the Company's principal
underwriter, A I M Distributors, Inc. AIM Management is an indirect wholly
owned subsidiary of AMVESCAP PLC, ("AMVESCAP") 11 Devonshire Square, London
EC2M 4YR, United Kingdom.
The sub-advisor to the LARGE CAP VALUE FUND and FLEX FUND is INVESCO
Capital Management, Inc., a Delaware corporation ("ICM"), which has its
principal office at 1315 Peach Street, N. E., Atlanta, Georgia 30309. ICM also
has an advisory office in Coral Gables, Florida and a marketing and client
service office in San Francisco, California.
The sub-advisor to the MULTIFLEX FUND is INVESCO Management and
Research, Inc., of Boston, Massachusetts ("IMR"), a Massachusetts corporation
which has its principal office at 101 Federal Street, Boston, MA 02110. IMR
manages predominantly pension and endowment accounts.
The sub-advisor to the REAL ESTATE FUND is INVESCO Realty Advisors,
Inc., a Texas corporation based in Dallas ("IRAI"), which has its principal
office at One Lincoln Centre, Suite 1200, 5400 LBJ Freeway/LB 2, Dallas, Texas
75240. IRAI is responsible for providing advisory services in the U.S. real
estate markets for AMVESCAP's clients worldwide. Established in 1983 as a
registered investment adviser and qualified professional asset manager. [As of
December 31, 1997, its direct Fund contained 98 properties totaling over 26.5
million square feet of commercial real estate and 14,265 apartment units.]
Clients include corporate plans and public pension funds as well as endowment
and foundation accounts.
The sub-advisor to INTERNATIONAL VALUE FUND is INVESCO Global Asset
Management Limited ("IGAM"), which has its principal office at Cedar House, 41
Cedar Avenue, Hamilton, HM 12 Bermuda. IGAM is responsible for analyzing global
economic trends and establishing AMVESCAP's global investment asset allocations
for AMVESCAP affiliates, in addition to managing assets directly.
ICM, IMR, IRAI and IGAM are indirect wholly owned subsidiaries of
AMVESCAP (formerly, AMVESCO PLC and INVESCO PLC). AMVESCAP is a publicly-traded
holding company that, through its subsidiaries, engages in the business of
investment management on an international basis. INVESCO PLC, which changed its
name to AMVESCO PLC on March 3, 1997, is one of the largest independent
investment management businesses in the world.
Under their Investment Advisory and Sub-Advisory Agreements (the
"Agreements") with the respective Funds, the Advisor and sub-advisors will,
subject to the supervision of the Directors of the Company and in conformance
with the stated policies of the Funds, manage the investment operations of the
Funds. In this regard, it will be the responsibility of the Advisor and
sub-advisors not only to make investment decisions for the Funds, but also to
place the purchase and sale orders for the portfolio transactions of the Funds.
(See "Brokerage and Portfolio Transactions.") The Investment Advisory Agreement
provides that, in fulfilling its responsibilities, the Advisor may engage the
services of other investment managers with respect to one or more of the Funds.
The Advisor is also responsible for furnishing to the Funds, at the
Advisor's expense, the services of persons believed to be competent to perform
all supervisory and administrative services required by the Funds, in the
judgment of the Directors, to conduct their respective businesses effectively,
as well as the offices, equipment and other facilities necessary for their
operations. Such functions include the maintenance of each Fund's accounts and
records, and the preparation of all requisite corporate documents such as tax
returns and reports to the SEC and shareholders. Operational services which are
necessary for the
18
<PAGE> 76
day-to-day operations of the Funds are provided under a separate Operating
Services Agreement between the Company and AIM (See "Operating Services
Agreement").
Rule 18f-3 under the 1940 Act ("Rule 18-f-3") permits a fund to use a
multiclass system including separate class arrangements for distribution of
shares and related exchange privileges applicable to the classes. The Company's
Plan Pursuant To Rule 18f-3 provides that advisory and operating services fees
(see "Operating Services Agreement") are expenses of a particular Fund that are
not attributable to a particular class of the Fund ("Fund Expenses") so shall
be allocated to each class on the basis of its net asset value relative to the
net asset value of the Fund. (See "Computation of Net Asset Value").
Except as discussed below (see "Operating Services Agreement"), each
of the Funds is responsible for the payment of its own expenses. Interest,
taxes, distribution expenses, directors' fees and expenses and extraordinary
items such as litigation costs will be borne by the Company or particular Fund,
as applicable. Expenditures, including costs incurred in connection with the
purchase or sale of Fund securities, which are capitalized in accordance with
generally accepted accounting principles applicable to investment companies,
are accounted for as capital items and not as expenses. [There were no
reimbursements for the Funds during the periods ended December 31, 1997, 1996
and 1995.]
For the services to be rendered and the expenses to be assumed by the
Advisor under the Investment Advisory Agreements, each Fund will pay to the
Advisor an advisory fee which will be computed daily and paid as of the last
day of each month on the basis of the Fund's daily net asset value, using for
each daily calculation the most recently determined net asset value of the
Fund. On an annual basis, the advisory fee is equal to 0.75% of the average net
asset value of net assets of the Fund for each of the LARGE CAP VALUE FUND and
FLEX FUND, 0.90% of the average net asset value of the REAL ESTATE FUND and
1.00% of the average net asset value of each of the MULTIFLEX FUND and
INTERNATIONAL VALUE FUND. Those fees which equal 0.75% of average annual net
assets are higher than those generally charged by investment advisors to
similar funds for advisory services. However, the Advisor also provides certain
supervisory and administrative services to the Funds pursuant to the Investment
Advisory Agreements.
For the services to be rendered and the expenses to be assumed by ICM,
IGAM, IMR and IRAI under their respective Sub-Advisory Agreements, the Advisor
will pay to each sub-advisor a fee which will be computed daily and paid as of
the last day of each month on the basis of each Fund's daily net asset value,
using for each daily calculation the most recently determined net asset value
of the Fund. (See "Computation of Net Asset Value"). On an annual basis, the
sub-advisory fee is equal to 0.20% of the average net asset value of the Fund
for each of the LARGE CAP VALUE FUND and FLEX FUND; 0.35% of the average net
asset value of the REAL ESTATE FUND on assets up to $100 million and 0.25% on
assets in excess of $100 million; 0.35% of the average net asset value of the
MULTIFLEX FUND on assets up to $500 million and 0.25% on assets in excess of
$500 million; and the following for the INTERNATIONAL VALUE FUND: 0.35% on net
assets up to $50 million, 0.30% on net assets over $50 million and up to $100
million, and 0.25% on net assets over $100 million.
The current Investment Advisory and Sub-Advisory Agreements were
approved by the shareholders of each of the Funds on July 9, 1997, effective as
of August 4, 1997, for an initial two-year period. Thereafter, the Agreements
will each continue in effect from year to year provided such continuance is
specifically approved at least annually by (i) the vote of a majority of each
applicable Fund's outstanding voting securities (see "General Information About
the Company") or by the Directors, and (ii) the vote of a majority of the
Directors, who are not "interested persons" (as such term is defined in the
1940 Act) of the Funds or the Advisor or the respective sub-advisor. The
Agreements are terminable on 60 days' written notice by either party thereto
and will terminate automatically if assigned.
For the fiscal years ended December 31, 1997, 1996 and 1995, the
aggregate amounts of the advisory fees paid to AIM (or INVESCO Services, Inc.,
the prior advisor) by the Funds, were as follows:
19
<PAGE> 77
<TABLE>
<CAPTION>
Aug. 4 Jan. 1
to Dec. 31 to Aug. 3
Fund 1997* 1997 1996 1995
- ------------------------ ---------- ---------- ----------- -----------
<S> <C> <C>
LARGE CAP VALUE FUND $ $ $ 946,203 $ 725,315
FLEX FUND 3,351,899 2,387,908
MULTIFLEX FUND 2,164,778 1,424,150
REAL ESTATE FUND 102,386 13,012
INTERNATIONAL VALUE FUND 314,843 24,906
</TABLE>
*Effective August 4, 1997, AIM became advisor to the Funds.
The investment advisory services of the Advisor to the Funds are not
exclusive and the Advisor is free to render investment advisory services to
others, including other investment companies. See "Operating Services
Agreement" below regarding expense limitations.
OPERATING SERVICES AGREEMENT
AIM, as manager of the Funds, also provides operating services
pursuant to an Operating Services Agreement with the Fund. Under the Operating
Services Agreement, each Fund pays to AIM an annual fee of 0.45% of daily net
assets of the Fund for providing or arranging to provide accounting, legal
(except litigation), dividend disbursing, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. These
agreements provide that AIM pays all fees and expenses associated with these
and other functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
The combined effect of the Advisory Agreements and Operating Services
Agreement, and the Distribution Plans of each of the Funds (see "Distribution
of Shares"), is to place a cap or ceiling on the total expenses of each Fund,
other than brokerage commissions, interest, taxes, litigation, directors' fees
and expenses, and other extraordinary expenses. AIM has voluntarily agreed to
adhere to maximum expense ratios for the Funds. To the extent that a Fund's
expenses exceed the amounts listed below, AIM will waive its fees or reimburse
the Fund to assure that each Fund's expenses do not exceed the designated
maximum amounts except for those items specifically identified above. The
expense ceilings include reductions at larger asset sizes to reflect
anticipated economies of scale as the Funds grow in size.
If, in any calendar quarter, the average net assets of each of the
LARGE CAP VALUE FUND or FLEX FUND are less than $500 million, each Fund's
expenses shall not exceed 1.55% for Class A and 2.20% for Class C; on the next
$500 million of net assets, expenses shall not exceed 1.50% for Class A and
2.15% for Class C; on the next $1 billion of net assets, expenses shall not
exceed 1.45% for Class A and 2.10% for Class C; and on all assets over $2
billion, expenses shall not exceed 1.40% for Class A and 2.05% for Class C. If,
in any calendar quarter, the average net assets of the MULTIFLEX FUND or
INTERNATIONAL VALUE FUND are less than $100 million, expenses shall not exceed
1.80% for Class A and 2.45% for Class C; on the next $400 million of net
assets, expenses shall not exceed 1.75% for Class A and 2.40% for Class C; on
the next $500 million, expenses shall not exceed 1.70% for Class A and 2.35%
for Class C; on the next $1 billion of net assets, expenses shall not exceed
1.65% for Class A and 2.30% for Class C; and on all assets over $2 billion,
expenses shall not exceed 1.60% for Class A and 2.25% for Class C. If, in any
calendar quarter, the average net assets of the REAL ESTATE FUND are less than
$500 million, expenses shall not exceed 1.70% for Class A and 2.35% for Class
C; on the next $500 million, expenses shall not exceed 1.65% for Class A and
2.30% for Class C; and on all assets over $1 billion, expenses shall not exceed
1.60% for Class A and 2.25% for Class C.
20
<PAGE> 78
THE DISTRIBUTOR
AIM Distributors, the Company's distributor, is the principal
underwriter of the Company under a separate Distribution Agreement (the
"Distribution Agreement"). The Distributor's office is located at 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1143. The Distributor will receive
payments from each Fund pursuant to the provisions of the Company's plans of
distribution described under "Distribution of Shares." Prior to August 4, 1997,
INVESCO Services, Inc. (the "Prior Distributor") was the principal underwriter
of the Company.
[Prior to May 1, 1995, the Prior Distributor received directly the
full amount of all contingent deferred sales charges paid upon redemption of
shares of the LARGE CAP VALUE FUND and FLEX FUND purchased prior to January 1,
1992. Imposition of a contingent deferred sales charge on redemptions of shares
purchased prior to 1992 has been discontinued.]
The following chart reflects the total sales charges paid in
connection with the sale of shares of each Fund and the amount retained by AIM
Distributors for the period August 4, 1997 to December 31, 1997, and the amount
retained by the Prior Distributor for the period January 1, 1997 to August 3,
1997:
<TABLE>
<CAPTION>
JANUARY 1, 1997 AUGUST 4, 1997
TO TO
AUGUST 3, 1997 DECEMBER 31, 1997
---------------------------------------------
AMOUNT SALES AMOUNT
RETAINED CHARGES RETAINED
----------- ----------- ----------
<S> <C> <C> <C>
LARGE CAP VALUE FUND........... $ $ $
FLEX FUND......................
MULTIFLEX FUND...............
REAL ESTATE FUND...............
INTERNATIONAL VALUE FUND.......
</TABLE>
DISTRIBUTION OF SHARES
Rule 12b-1 under the 1940 Act ("Rule 12b-1") permits a fund to use its
assets to bear expenses of distributing its shares if it complies with various
conditions, including adoption of a plan of distribution containing certain
provisions set forth in the Rule. The plans described below were approved with
respect to each Fund by the directors of the Fund, including a majority of the
directors who are not "interested persons" of the Funds as defined in the 1940
Act ("Independent Directors") and the directors who have no direct or indirect
financial interest in the plan or any agreement related thereto (the "Rule
12b-1 Directors"). The directors determined that, in their judgment, there was
a reasonable likelihood that the plans will benefit each Fund and its
shareholders by, among other things, providing broker-dealers with an incentive
to sell additional shares of the Company, thereby helping to satisfy the
Company's liquidity needs and helping to increase the Company's investment
flexibility. Continuation of the plans is approved annually. On June 8, 1993,
the Plan and Agreement of Distribution ("Distribution Plan") applicable to
Class C shares was approved by shareholders of the LARGE CAP VALUE FUND and
FLEX FUND. On November 8, 1993, the Distribution Plan applicable to Class C
shares was approved by the sole shareholder of the MULTIFLEX FUND. On April 10,
1995, the Distribution Plan applicable to Class C shares was approved by the
sole shareholder of each of the REAL ESTATE FUND and INTERNATIONAL VALUE FUND.
The Distribution Plan for Class A shares was approved by the board of directors
of the Company at its August 13, 1996 Board meeting, and by the initial
shareholder(s) of Class A shares of each Fund prior to their public offering.
On February 4, 1997, the board of directors approved amending the Distribution
Plan for Class A shares, effective January 1, 1997, to convert the Distribution
Plan to a compensation type Rule 12b-1 plan. This amendment of the Distribution
Plan did not result in increasing the amount of any Fund's payments thereunder.
The Master Distribution Plan for Class B shares was approved by the board of
directors of the Company at its September 20, 1997 Board meeting.
21
<PAGE> 79
CLASS A DISTRIBUTION PLAN. The Class A Plan provides that each Fund may incur
certain distribution and maintenance fees which may not exceed a maximum annual
rate of 0.35% of the average net assets of the Funds attributable to Class A
shares. This expense includes the payment to broker-dealers and other
qualifying financial institutions of a "service fee" for providing account
maintenance or personal service to existing shareholders.
Under the Class A Plan, broker-dealers selling Company shares may be
paid fees for selling shares and maintaining Company assets. Of such fees .25%
of average net assets may be paid as a "service fee." The service fee, computed
on the basis of the average net asset value of Class A shares sold by
broker-dealers which are outstanding on the books of such Funds for each month,
will be made at least quarterly to the selling broker-dealer. Additionally, the
plan authorizes each applicable Fund, subject to the annual limitations
described above, to pay the Distributor (or other broker-dealers): (1) the
costs and expenses incurred in preparation, printing and distribution of the
Company's sales literature and prospectuses and statements of additional
information for prospective investors; (2) amounts from time to time to support
marketing shares of the Company through programs with broker-dealers selling
Company shares; and (3) overhead expenses which include the costs of the
Distributor's personnel whose primary responsibilities involve marketing the
Company. In addition, the plan provides that the Company may pay, subject to
the annual limitations, such other distribution costs and expenses as the
Directors may from time to time specify.
CLASS B DISTRIBUTION PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds. Under the Class B Plan, the Funds pay compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, the Funds pay a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class B shares.
Amounts paid in accordance with the Class B Plan may be used to finance any
activity primarily intended to result in the sale of Class B shares, including,
but not limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
right under the Class B Plan in order to finance distribution expenditures in
respect of Class B shares.
CLASS C DISTRIBUTION PLAN. The Class C Plan provides that each Fund may incur
certain distribution and maintenance fees which may not exceed a maximum annual
rate of 1.00% of the Funds' average annual net assets attributable to their
respective Class C shares. This expense includes the payment of 0.25% of
average annual net assets to broker-dealers as a "service fee" for providing
account maintenance or personal service to existing shareholders.
Under the Class C Plan, broker-dealers selling Company shares may be
paid fees for selling shares and maintaining Company assets. Generally, an
asset-based fee for selling shares and providing services to shareholders will
be paid out of Rule 12b-1 plan payments by the Distributor as follows: payments
not exceeding 1.00% per annum, which amount includes the 0.25% "service fee,"
of the average net asset value of Class C shares sold by broker-dealers, which
are outstanding on the books of such Funds for each month, will be made at
least quarterly to the selling broker-dealer. Additionally, the plan authorizes
each applicable Fund, subject to the annual limitations described above, to pay
the Distributor (or other broker-dealers): (1) the costs and expenses incurred
in preparation, printing and distribution of the Company's prospectuses and
statements of additional information for prospective investors, and sales
literature; (2) amounts from time to time to support marketing shares of the
Company through programs with broker-dealers selling Company shares; and (3)
overhead expenses which include the costs of the Distributor's personnel whose
primary responsibilities involve marketing the Company. In addition, the plan
provides that the Company may pay, subject to the annual limitations, such
other distribution costs and expenses as the Directors may from time to time
specify.
22
<PAGE> 80
ALL PLANS. Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; assisting customers
in changing dividend options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of the Fund's shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Fund's shares; and providing such other
information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the Funds
and the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold shares of the Funds; and such other administrative
services as the Funds reasonably may request, to the extent permitted by
applicable statute, rule or regulation. Similar agreements may be permitted
under the Plans for institutions which provide recordkeeping for and
administrative services to 401(k) plans.
The Company may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Funds
authorizing payments to selected insurance companies offering variable annuity
contracts to employers as funding vehicles for retirement plans qualified under
Section 401(a) of the Internal Revenue Code. Services provided pursuant to such
Variable Contract Agreements may include some or all of the following:
answering inquiries regarding the Fund and the Company; performing
sub-accounting; establishing and maintaining Contractholder accounts and
records; processing and bunching purchase and redemption transactions;
providing periodic statements of contract account balances; forwarding such
reports and notices to Contractholders relative to the Fund as deemed
necessary; generally, facilitating communications with Contractholders
concerning investments in a Fund on behalf of Plan participants; and performing
such other administrative services as deemed to be necessary or desirable, to
the extent permitted by applicable statute, rule or regulation to provide such
services.
Financial intermediaries and any other person entitled to receive
compensation for selling shares of the Funds may receive different compensation
for selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Funds agree to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment
period for each business day of the Funds during such period at the annual rate
of 0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only to
those selected dealers or other institutions who are dealers or institutions of
record at the close of business on the last business day of the applicable
payment period for the account in which the Funds' shares are held.
The Plans are subject to any applicable limitations imposed from time
to time by rules of the National Association of Securities Dealers, Inc.
23
<PAGE> 81
AIM Distributors does not act as principal, but rather as agent for
the Funds, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Funds and not of AIM
Distributors.
GENERAL. The Plans may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors or by vote of a majority of the outstanding voting
securities of the applicable class of the Fund. Any change in a Plan that would
materially increase the distribution expenses of a class of the Fund provided
for in the Plans requires shareholder approval; otherwise, the Plans may be
amended by a majority of the Directors, including a majority of the Rule 12b-1
Directors.
For so long as the Plans are in effect, the Funds will be required to
commit the selection and nomination of candidates for Independent Directors to
the discretion of the Independent Directors.
The total amounts paid by each Fund under the foregoing arrangements
for any year may not exceed the maximum plan limit specified above, and the
amounts and purposes of expenditures under the Plans must be reported to the
Rule 12b-1 Directors quarterly. The Rule 12b-1 Directors may require or approve
changes in the implementation or operation of the Plans and may also require
that total expenditures by each applicable class of a Fund under the Plans be
kept within limits lower than the maximum amount permitted by the Plans as
stated above.
The Distributor may pay additional amounts from its own resources to
dealers or others who meet designated eligibility criteria relating to sales of
Company shares, or who provide administrative or informational assistance to
shareholders.
An estimate by category of actual fees paid by each of the Funds under
the Class A Distribution Plan for the year ended December 31, 1997, were
allocated as follows:
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP MULTIFLEX REAL VALUE
VALUE FUND FLEX FUND FUND ESTATE FUND FUND
---------- --------- --------- ----------- -------------
CLASS A
<S> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders)
Seminars
Compensation to
Underwriters to partially
offset other marketing
expenses
Compensation to
Dealers including
finder's fees
Compensation to
Sales Personnel
Annual Report Total
</TABLE>
24
<PAGE> 82
An estimate by category of actual fees paid by each of the Funds under the
Class C Distribution Plan for the year ended December 31, 1997, were allocated
as follows:
<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP MULTIFLEX REAL VALUE
VALUE FUND FLEX FUND FUND ESTATE FUND FUND
---------- --------- --------- ----------- -------------
CLASS C
<S> <C> <C> <C> <C> <C>
Advertising $ $ $ $ $
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders)
Seminars
Compensation to
Underwriters to partially
offset other marketing
expenses
Compensation to
Dealers including
finder's fees
Compensation to
Sales Personnel
Annual Report Total
</TABLE>
For the fiscal year ended December 31, 1997, each Fund paid the Prior
Distributor and AIM Distributors the following amounts with respect to each
class of shares under the Distribution Plans:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
----------------------------------- ---------------------------------
PRIOR AIM PRIOR AIM
DISTRIBUTOR(1) DISTRIBUTORS(2) DISTRIBUTOR(1) DISTRIBUTORS(2)
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND
FLEX FUND
MULTIFLEX FUND
REAL ESTATE FUND
INTERNATIONAL VALUE FUND
</TABLE>
(1) For the period January , 1997 to August 3, 1997
(2) For the period August 4, 1997 to December 31, 1997
Class B shares had not commenced operation as of December 31, 1997.
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
It is the intention of each of the Funds to distribute to its
respective shareholders all of the applicable Fund's net investment income and
net realized capital gains, if any. The per share dividends and distribution on
each class of shares of a Fund will be reduced as a result of any service fees
applicable to that class. The gross income, realized and unrealized capital
gains and losses and expenses (other than Class Expenses, as
25
<PAGE> 83
defined below) of each Fund shall be allocated to each class on the basis of
its net asset value relative to the net asset value of the Fund. Expenses to be
so allocated include expenses of the Company that are allocated to a Fund and
are not attributable to a particular Fund or class of a Fund ("Company
Expenses") and expenses of the particular Fund that are not attributable to a
particular class of the Fund ("Fund Expenses"). Company Expenses include, but
are not limited to, directors' fees. Fund Expenses include advisory fees and
operating service fees. Expenses attributable to a particular class ("Class
Expenses") include distribution plan expenses, which must be allocated to the
class for which they are incurred. Other expenses may be allocated as Class
Expenses, but only if the Company's President and Treasurer have determined,
subject to Board approval, that such category of expense will be treated as
Class Expenses, consistent with applicable legal principles under the 1940 Act
and the Internal Revenue Code of 1986, as amended ("Code").
The LARGE CAP VALUE FUND, FLEX FUND, MULTIFLEX FUND, and REAL ESTATE
FUND make periodic distributions of their net investment income (including any
net short-term capital gain) during the months of March, June, September and
December and distributes any realized net capital gains at least annually,
during the month of December. The INTERNATIONAL VALUE FUND makes semiannual
distributions of net investment income (including any net short-term capital
gain) during the months of June and December and distributes any realized net
capital gain at least annually, during the month of December.
All such distributions will be reinvested automatically in additional
shares (or fractions thereof) of each applicable Fund and class pursuant to
each Fund's Automatic Dividend Reinvestment Plan unless a shareholder has
elected not to participate in this plan or has elected to terminate his
participation in the plan and to receive his distributions in excess of ten
dollars in cash. (See "Special Plans- Automatic Dividend Investment Plan" in
the Prospectus.)
FEDERAL TAXES
Each Fund of the Company intends to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Accordingly, a Fund generally must, among other things, (a)
derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies (the "Income Requirement"); and (b) diversify its
holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the Fund's assets is represented by cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities limited, in respect of any one issuer,
to an amount not greater than 5% of the value of the Fund's total assets and
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities and the 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.
As a regulated investment company, a Fund generally will not be
subject to U.S. federal income tax on income and gains that it distributes to
shareholders, if at least 90% of each Fund's investment company taxable income
(which includes, among other items, dividends, interest and the excess of any
short-term capital gains over long-term capital losses) for the taxable year is
distributed. The Funds intend to distribute substantially all of such income.
Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax at the Fund level. To avoid the tax, each Fund must distribute during each
calendar year, (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for a one-year period generally ending on October 31 of the 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")), and (3) all ordinary income and capital gains for previous years
that were not distributed during such years. For purposes of excise tax, a fund
(1) shall offset a net ordinary loss (but not below the net capital gain) for
any calendar year in determining its capital gain net income for the one-
26
<PAGE> 84
year period ending on October 31 of such calendar year and (2) 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, to include gains and losses in the succeeding year). To avoid
application of the excise tax, each Fund intends to make distributions in
accordance with the calendar year distribution requirements. A distribution
will be treated as paid on December 31 of the current calendar year if it is
declared by the Fund in October, November or December of the year with a record
date in such a month and paid by the Fund during January of the following year.
Such distributions will be taxable to shareholders in the calendar year the
distributions are declared, rather than the calendar year in which the
distributions are received.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
Some of the options, futures and foreign currency forward contracts in
which a Fund may invest may be "Section 1256 contracts." Gains (or losses) on
these contracts generally are considered to be 60% long-term and 40% short-term
capital gains or losses; however foreign currency gains or losses arising from
certain Section 1256 contracts are ordinary in character. Also, Section 1256
contracts held by a Fund at the end of each taxable year (and on certain other
dates prescribed in the Code) are "marked to market" with the result that
unrealized gains or losses are treated as though they were realized.
The transactions in options, futures and forward contracts undertaken
by a Fund may result in "straddles" for federal income tax purposes. The
straddle rules may affect the character of gains or losses realized by a Fund.
In addition, losses realized by a Fund on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the consequences of such transactions to a Fund are not
entirely clear. The straddle rules may increase the amount of short-term
capital gain realized by a Fund, which is taxed as ordinary income when
distributed to shareholders.
A Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Transactions that may be engaged in by certain of the Funds (such as
short sales "against the box", offsetting notional principal contracts or
futures or forward contracts) may be subject to special tax treatment as
"constructive sales" 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 in the taxable year
which includes such date).
Because application of any of the foregoing rules governing Section
1256 contracts, constructive sales and straddles may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected investment or straddle positions, the amount which
must be distributed to shareholders as ordinary income or long-term capital
gain may be increased or decreased substantially as compared to a fund that did
not engage in such transactions.
SWAP AGREEMENTS
The MULTIFLEX FUND and INTERNATIONAL VALUE FUND may enter into swap
agreements. The rules governing the tax aspects of swap agreements are in a
developing stage and are not entirely clear in certain respects. Accordingly,
while a Fund intends to account for such transactions in a manner deemed to be
appropriate, the Internal Revenue Service might not accept such treatment. If
it did not, the status of the Company as a regulated investment company might
be affected. The Company intends to monitor developments in this area. Certain
requirements that must be met under the Code in order for the Company to
qualify as a regulated investment company may limit the extent to which the
Fund will be able to engage in swap agreements.
27
<PAGE> 85
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Gains or losses attributable to fluctuations in exchange rates which
occur between the time a Fund accrues income or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such liabilities generally
are treated as ordinary income or ordinary loss. Similarly, on disposition of
some investments, including debt securities denominated in a foreign currency
and certain forward contracts, gains or losses attributable to fluctuations in
the value of the foreign currency between the date of acquisition of the
security and the date of disposition also are treated as ordinary gain or loss.
These gains and losses, referred to under the Code as "Section 988" gains or
losses, increase or decrease the amount of a Fund's investment company taxable
income available to be distributed to its shareholders as ordinary income. If
Section 988 losses exceed other investment company taxable income during a
taxable year, the Fund may not be able to make any ordinary dividend
distributions, and distributions made before the losses were realized may be
recharacterized as a return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his or her Fund shares.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
A Fund may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign corporation is classified as a PFIC if at least one-half of
its assets constitute investment-type assets, or 75% or more of its gross
income is investment-type income. If a Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to a
tax on a portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. In general, under the PFIC
rules, an excess distribution is treated as having been realized ratably over
the period during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Fund taxable years and an interest factor will be added to
the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, the Fund generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the
taxation of excess distributions, would not apply. In addition, another
election is available that would involve marking to market the Fund's PFIC
shares at the end of each taxable year (and on certain other dates prescribed
in the Code), with the result that unrealized gains are treated as though they
were realized. If this election were made, tax at the Fund level under the PFIC
rules would generally be eliminated, but the Fund could, in limited
circumstances, incur nondeductible interest charges or deferred taxes. A Fund's
intention to qualify annually as a regulated investment company may limit its
elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, as well as subject a
Fund itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC shares.
DEBT SECURITIES ACQUIRED AT A DISCOUNT
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund may be
treated as debt securities that are issued originally at a discount. Generally,
the amount of the original issue discount ("OID") is treated as interest income
and is included in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the
debt security matures.
28
<PAGE> 86
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund in the
secondary market may be treated as having market discount. Generally, gain
recognized on the disposition of, and any partial payment of principal on, a
debt security having market discount is treated as ordinary income to the
extent the gain, or principal payment, does not exceed the "accrued market
discount" on such debt security. In addition, the deduction of any interest
expenses attributable to debt securities having market discount may be
deferred. Market discount generally accrues in equal daily installments. A Fund
may make one or more of the elections applicable to debt securities having
market discount, which could affect the character and timing of recognition of
income.
Some debt securities (with a fixed maturity date of one year or less
from the date of issuance) that may be acquired by a Fund may be treated as
having acquisition discount, or OID in the case of certain types of debt
securities. Generally, a Fund will be required to include the acquisition
discount, or OID, in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the
debt security matures. A Fund may make one or more of the elections applicable
to debt securities having acquisition discount, or OID, which could affect the
character and timing of recognition of income.
A Fund generally will be required to distribute dividends to
shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such income may not have
been received by the Fund. Cash to pay such dividends may be obtained from
sales proceeds of securities held by the Fund or by borrowing.
DISTRIBUTIONS
With respect to tax-exempt shareholders, distributions from the Funds
will not be subject to federal income taxation to the extent permitted under
the applicable tax-exemption. With respect to shareholders that are not exempt
from federal taxation, distributions of investment company taxable income are
taxable to a U.S. shareholder as ordinary income, whether paid in cash or
shares. Dividends paid by a Fund to a corporate shareholder, to the extent such
dividends are attributable to dividends received from U.S. corporations, may
qualify for the dividends received deduction. However, the alternative minimum
tax applicable to corporations may reduce the value of the dividends received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated by a Fund
as capital gain dividends, are taxable as long-term capital gains, whether paid
in cash or in shares, regardless of how long the shareholder has held the
Fund's shares and are not eligible for the dividends received deduction.
Shareholders will be notified annually as to the U.S. federal tax status of
distributions.
If the net asset value of shares is reduced below a shareholder's cost
as a result of a distribution by a Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors
should be careful to consider the tax implications of buying shares of a Fund
just prior to a distribution. The price of shares purchased at this time may
reflect the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will receive a distribution which generally will be taxable
to them.
DISPOSITION OF SHARES
With respect to tax-exempt shareholders, a redemption, sale or
exchange of shares of a Portfolio will not be subject to federal income
taxation to the extent permitted under the applicable tax-exemption. Upon a
redemption, sale or exchange of his or her shares of a Fund, a shareholder that
is not exempt from federal income taxation will realize a taxable gain or loss
depending upon his or her basis in the shares. A gain or loss will be treated
as capital gain or loss if the shares are capital assets in the shareholder's
hands and generally will be long-term or short-term, depending upon the
shareholder's holding period for the shares. Any loss realized on a redemption,
sale or exchange will be disallowed to the extent the shares disposed of are
replaced (including through reinvestment of dividends) within a period of 61
days beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to
reflect the disallowed loss. Any loss realized by a shareholder on the sale of
a Fund's shares held by the shareholder for six months or less will be treated
for tax purposes as a long-term capital loss to the extent of
29
<PAGE> 87
any distributions of capital gain dividends received or treated as having been
received by the shareholder with respect to such shares.
If a shareholder (a) incurs a sales load in acquiring shares of a
Fund, (b) disposes of such shares less than 91 days after they are acquired,
and (c) subsequently acquires shares of the Fund 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.
BACKUP WITHHOLDING
Each Fund will be required to report to the Internal Revenue Service
(the "IRS") all distributions and will also be required to report gross
proceeds from the redemption of the Fund's shares, except in the case of
certain exempt shareholders. All distributions and proceeds from the redemption
of Fund shares will be subject to withholding of federal income tax at a rate
of 31% ("backup withholding") in the case of non-exempt shareholders if (1) the
shareholder fails to furnish the Fund with and to certify the shareholder's
correct taxpayer identification number or social security number or (2) when
required to do so, the shareholder fails to certify that he or she is not
subject to backup withholding. Additionally, all dividend distributions will be
subject to withholding of federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if the IRS notifies the
shareholder or the Fund that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
OTHER TAXATION
Distributions may also be subject to additional state, local and
foreign taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above. This discussion does not purport to deal with all of
the tax consequences applicable to the Funds or shareholders. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
BROKERAGE AND PORTFOLIO TRANSACTIONS
The Advisor or sub-advisors will arrange for the placement of orders
and the execution of Fund transactions for each of the Funds. Various brokerage
firms may be used to carry out Fund transactions. The Advisor and sub-advisors
have agreed, in selecting brokers and dealers to be used in Fund transactions,
to give primary consideration to the broker's or dealer's ability to provide
the best execution of the transaction at prices most favorable to the Funds.
When such transactions involve listed securities, the Advisor and sub-advisors
take into consideration the advisability of effecting the transaction with a
broker or dealer which is not a member of the securities exchange on which the
security is listed, i.e., a third market transaction, or effecting the
transaction in the institutional or fourth market. In over-the-counter market
transactions, the Advisor and sub-advisors attempt to deal with the primary
market maker and thereby avoid payment of a brokerage commission. However, in
situations where in the Advisor's or sub-advisors' judgment execution through
some other broker is likely to result in a savings or other advantage to the
Fund, such broker will be used.
With respect to fixed and variable income securities, such portfolio
securities generally will be purchased or sold to parties acting as either
principal or agent. Newly issued securities normally will be purchased directly
from the issuer or from an underwriter acting as principal. Other purchases
will be placed with those dealers whom the Advisor or sub-advisors believe will
provide the best execution of the transaction at prices most favorable to the
applicable Fund. Usually, no brokerage commissions (as such) are paid by the
30
<PAGE> 88
Fund for such transactions, although the price paid usually includes an
undisclosed compensation to the dealer. The prices paid to the underwriters of
newly-issued securities normally include a concession paid by the issuer to the
underwriter. Purchases of after-market securities from dealers normally are
executed at a price between bid and asked prices.
Subject to the primary consideration of best execution at prices most
favorable to the applicable Fund, the Advisor or sub-advisors may, in the
allocation of such investment transaction business, consider the general
research and investment information and other services provided by the brokers
and dealers, although they have adopted no formula for such allocation.
Research services received from broker-dealers supplement AIM's own
research (and the research of sub-advisors to other clients of AIM), 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 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
Company's directors with respect to the performance, investment activities and
fees and expenses of other mutual funds. Such information may be communicated
electronically, orally or in written form. Research services may also include
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. These
research and investment information services make available to the Advisor and
sub-advisors the views and information of individuals and research staffs of
many securities firms for the Advisor's or sub-advisors' analysis and
consideration. Although such information may be a useful supplement to the
Advisor's and sub-advisors' own investment information, the value of such
research and services is not expected to reduce materially the expenses of the
Advisor or sub-advisors in the performance of its services under the Agreements
and will not reduce the advisory fee payable to the Advisor by the Funds. In
recognition of the value of the above-described brokerage and research services
provided by certain brokers, the Funds' Advisor or sub-advisors, consistent
with the standard of seeking to obtain the best execution on Fund transactions,
may place orders with such brokers for the execution of transactions for the
Funds on which the commissions or discounts are in excess of those which other
brokers might have charged for effecting the same transactions.
The Advisor and sub-advisors may also follow a policy of considering
sales of shares of the Funds as a factor in the selection of broker-dealers to
execute portfolio transactions, subject to the primary consideration of best
execution discussed above.
On occasions when the Advisor or sub-advisors deem the purchase or
sale of a security to be in the best interest of a Fund as well as other
customers, the Advisor or sub-advisors, to the extent permitted by applicable
laws and regulations, may aggregate the securities to be so purchased or sold
for such parties in order to obtain best execution and lower brokerage
commissions. In such event, allocation of the shares so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Advisor
or sub-advisors in the manner it considers to be most equitable and consistent
with its fiduciary obligations to all such customers, including the applicable
Fund. In some cases the aggregation of securities to be sold or purchased could
have a detrimental effect on the price of the security insofar as a Fund is
concerned. However, in other cases, the ability of a Fund to participate in
volume transactions will be beneficial to the Fund.
For the fiscal years ended December 31, 1997, 1996 and 1995, the LARGE
CAP VALUE FUND paid total brokerage commissions of $ , $75,469 and $86,189,
respectively. For the fiscal year ended December 31, 1997, AIM allocated
certain of LARGE CAP VALUE FUND'S brokerage transactions to certain
broker-dealers that provide AIM with certain research, statistical and other
information. Such transactions amounted to $ and the related commissions were $
. For the fiscal years ended December 31, 1997, 1996 and 1995, the FLEX FUND
paid total brokerage commissions of $ ,
31
<PAGE> 89
$193,286 and $116,550, respectively. For the fiscal year ended December 31,
1997, AIM allocated certain of FLEX FUND'S brokerage transactions to certain
broker-dealers that provide AIM with certain research, statistical and other
information. Such transactions amounted to $ and the related commissions were $
. For the fiscal years ended December 31, 1997, 1996 and 1995, the MULTIFLEX
FUND paid total brokerage commissions of $ , $400,646 and $247,023,
respectively. For the fiscal year ended December 31, 1997, AIM allocated
certain of MULTIFLEX FUND'S brokerage transactions to certain broker-dealers
that provide AIM with certain research, statistical and other information. Such
transactions amounted to $ and the related commissions were $ . For the fiscal
year ended December 31, 1997, and the period ended December 31, 1996, the REAL
ESTATE FUND paid total brokerage commissions of $ and $40,353, respectively.
For the fiscal year ended December 31, 1997, AIM allocated certain of REAL
ESTATE FUND'S brokerage transactions to certain broker-dealers that provide AIM
with certain research, statistical and other information. Such transactions
amounted to $ and the related commissions were $ . For the fiscal year ended
December 31, 1997, and the period ended December 31, 1996, the INTERNATIONAL
VALUE FUND paid total brokerage commissions of $ and $21,872, respectively. For
the fiscal year ended December 31, 1997, AIM allocated certain of INTERNATIONAL
VALUE FUND'S brokerage transactions to certain broker-dealers that provide AIM
with certain research, statistical and other information. Such transactions
amounted to $ and the related commissions were $ . The REAL ESTATE FUND and
INTERNATIONAL VALUE FUND commenced operations on May 1, 1995. There were no
brokerage commissions paid to affiliated broker-dealers during the fiscal years
ended December 31, 1997,1996 and 1995, by any of the Funds.
During the fiscal years ended December 31, 1997, 1996 and 1995, the
LARGE CAP VALUE FUND'S portfolio turnover rates were %, 19% and 17%,
respectively; the FLEX FUND'S portfolio turnover rates were %, 26%, and 5%,
respectively; and the MULTIFLEX FUND'S portfolio turnover rates were %, 62% and
50%, respectively. For the fiscal years ended December 31, 1997 and 1996, and
the period ended December 31, 1995, the REAL ESTATE FUND'S portfolio turnover
rates were %, 25% and 7%, respectively. For the fiscal years ended December 31,
1997 and 1996, and the period ended December 31, 1995, the INTERNATIONAL VALUE
FUND'S portfolio turnover rates were %, 5% and 2%, respectively. The REAL
ESTATE FUND and INTERNATIONAL VALUE FUND commenced operations on May 1, 1995.
At December 31, 1997, certain of the Funds held securities of the
Company's regular brokers or dealers, or their parents, as follows:
<TABLE>
<CAPTION>
Value of Securities
Fund Broker or Dealer at December 31, 1997
- ---- ---------------- --------------------
<S> <C> <C>
[LARGE CAP VALUE FUND] $
[FLEX FUND]
[MULTIFLEX FUND]
</TABLE>
REDEMPTIONS
It is possible that in the future conditions may exist which would, in
the opinion of the Directors, make it undesirable for a Fund to pay for
redeemed shares in cash. In such cases, the Directors may authorize payment to
be made in Fund securities or other property of the applicable Fund. However,
each Fund is obligated under the 1940 Act to redeem for cash all shares
presented to such Fund for redemption by any one shareholder up to $250,000 (or
1% of the applicable Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions are valued at the same value
assigned to them in computing the applicable Fund's net asset value per share.
Shareholders receiving such securities are likely to incur brokerage costs on
their subsequent sales of such securities.
32
<PAGE> 90
PERFORMANCE INFORMATION
The Funds may from time to time include figures indicating their yield
and total return in advertisements or reports to shareholders or prospective
investors. Following is information on how those figures are computed.
Yield
ALL FUNDS
All Funds may advertise "yield," "dividend yield" and "distribution
yield" for each class. Quotations of yield for each class of these Funds will
be based on all investment income per share earned during a particular 30-day
period (including dividends and interest), less expenses accrued during the
period ("net investment income"), and are computed by dividing net investment
income by the maximum offering price per share (which includes the maximum
sales charge) on the last day of the period, according to the following
formula:
6
Yield = 2[(a-b + 1) -1]
---
cd
where a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements or waivers),
c = the average daily number of shares outstanding
during period that were entitled to receive
dividends, and
d = the maximum offering price per share on the last
day of the period.
For the 30-day period ended December 31, 1997, the yield for Class A
shares and Class C shares of Real Estate Fund were ___% and ___%, respectively.
Dividend yield is a measure of investment return during a specified
period based on dividends actually paid by a class of a Fund during that
period. Dividend yield is calculated by totaling the dividends paid by a class
from its net investment income during the specified period and dividing that
sum by the net asset value per share of the class on the last day of the
period. Distribution yield is computed in the same way, but includes
distributions paid with respect to a class from capital gains realized by the
Fund, as well as dividends from the net investment income of the class. Where
the dividend or distribution yield is calculated for a period of less than a
year, results may be annualized by using the following calculation method:
Total dividends/distributions paid by the class during the specified
period are divided by the net asset value of a class share on the last
day of the specified period. This result is divided by the number of
days in the specified period and the result is multiplied by 365.
The dividend yield for the 30-day period ended December 31, 1997, for
Class A shares and Class C shares of Real Estate Fund were ___% and ___%,
respectively.
33
<PAGE> 91
The distribution yield for the 30-day period ended December 31, 1997,
for Class A shares and Class C shares of Real Estate Fund were ___% and ___%,
respectively.
Class B shares had not commenced operation as of December 31, 1997;
therefore, no yield information is available for the period ended December 31,
1997, as quoted above.
Total Return
Funds may advertise their "average annual total return" and their
"total return." Average annual total return and total return figures represent
the increase (or decrease) in the value of an investment in the Fund over a
specified period. Both calculations assume that all income dividends and
capital gains distributions during the period are reinvested at net asset value
in additional shares of the respective Fund.
Quotations of the average annual total return for each class reflect
the deduction of a proportional share of expenses allocated to the class and
Class Expenses on an annual basis. The results, which are annualized, represent
an average annual compound rate of return on a hypothetical investment in the
class over a period of 1, 5 and 10 years ending on the most recent calendar
quarter.
The average annual total return as of December 31, 1997, for Class A
shares of each of the following Funds for the periods listed below are as
follows:
<TABLE>
<CAPTION>
Fund Since Inception*
---- ---------------
<S> <C>
LARGE CAP VALUE FUND %
FLEX FUND %
MULTIFLEX FUND %
REAL ESTATE FUND %
INTERNATIONAL VALUE FUND %
</TABLE>
- ------------
* From January , 1997 (commencement of operations) (__ months).
The average annual total return as of December 31, 1997, for shares
now designated as Class C shares of each of the following Funds for the periods
listed below are as follows:
<TABLE>
<CAPTION>
Fund 1 Year 5 Years 10 Years Inception
- ---- ------ ------- -------- ---------
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND % % % %
FLEX FUND % % N/A %*
MULTIFLEX FUND % N/A N/A %**
REAL ESTATE FUND % N/A N/A %***
INTERNATIONAL VALUE FUND % N/A N/A %***
</TABLE>
- ------------
* From 02-24-88 (commencement of operations) (9.8 years).
** From 11-17-93 (commencement of operations) (4.8 years).
*** From 05-01-95 (commencement of operations) (2.6 years).
34
<PAGE> 92
Class B shares had not commenced operations as of December 31, 1997;
therefore, no total return information is available for the period ended
December 31, 1997.
The following tables illustrate performance of shares of each Fund for
Class A shares and those shares now designated as Class C shares. (Class B
shares were not offered during the periods illustrated.)
<TABLE>
<CAPTION>
Class A Class C
--------------- ------------------------
One Five Ten
Since Inception* Year Years Years
--------------- ---- ----- -----
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND
Based on the average annual
compound rates of return listed above
over these periods, you could have
expected the following redeemable
values on a $1,000 investment assuming
redemption at the end of each time
period (December 31, 1997) $ $ $ $
You could have expected the following
values assuming no redemption at the
end of each time period
(December 31, 1997) $ $ $ $
</TABLE>
- -------------
* Class A Shares commenced operations on January , 1997.
<TABLE>
<CAPTION>
Class A Class C
--------------- ------------------------
One Five
Since Inception* Year Years
--------------- ---- -----
<S> <C> <C> <C>
FLEX FUND
Based on the average annual
compound rates of return listed above
over these periods, you could have
expected the following redeemable
values on a $1,000 investment assuming
redemption at the end of each time
period (December 31, 1997) $ $ $
You could have expected the following
values assuming no redemption at the
end of each time period
(December 31, 1997) $ $ $
</TABLE>
- -------------
* Class A shares commenced operations on [January , 1997].
Quotations of total return, which are not annualized, represent
historical earnings and asset value fluctuations. Total return is based on past
performance and is not a guarantee of future results. These rates of return are
net of all expenses and assume all dividends and distributions by the Funds
have been reinvested on the reinvestment dates during each period.
35
<PAGE> 93
The following table provides the actual total rates of return for
shares that are now designated as Class C shares of the indicated Funds for the
fiscal years ended December 31, 1997, 1996, 1995, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
LARGE REAL INTERNATIONAL
CAP VALUE FLEX MULTIFLEX ESTATE VALUE
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
1997 % % % % %
1996 17.17% 13.61% 17.03% 36.43% 20.99%
1995 30.28% 27.30% 21.58% 9.12%** 11.28%**
1994 2.69% 0.64% -1.02% N/A N/A
1993 9.16% 10.48% 0.46%* N/A N/A
1992 4.84% 7.72% N/A N/A N/A
</TABLE>
* Period November 17, 1993 (commencement of operations) through December 31,
1993.
** Period May 1, 1995 (commencement of operations) through December 31,
1995.
The following are the actual total rates of return, as of December 31, 1997
(period (commencement of operations) through December 31,
1997), for the Class A shares of each Fund are LARGE CAP VALUE FUND %, FLEX
FUND %, MULTIFLEX FUND %, b % and INTERNATIONAL VALUE FUND %.
Class B shares had not commenced operation as of December 31, 1997.
Performance information for a Fund or class reflects only the
performance of a hypothetical investment in that Fund or class during the
particular time period on which the calculations are based. Performance
information should be considered in light of the Fund's investment objectives
and policies, the types of quality of the Fund's portfolio investments, market
conditions during the particular time period and operating expenses. Such
information should not be considered as a representation of the future
performance of a Fund or class.
MISCELLANEOUS
Principal Shareholders
As of December 15, 1997, the following entities owned of record or
beneficially 5% or more of the shares of a Fund:
<TABLE>
<CAPTION>
Name and Address of Number Percent
Beneficial Owner of Shares of Class
- ------------------- --------- --------
<S> <C> <C>
CLASS A
- -------
LARGE CAP VALUE FUND
James L. Cash 24,006.599 13.11%
5703 155th Ave. NE
Redmond, WA 98052
</TABLE>
36
<PAGE> 94
<TABLE>
<CAPTION>
Name and Address of Number Percent
Beneficial Owner of Shares of Class
- ------------------- --------- --------
<S> <C> <C>
FLEX FUND
Merrill Lynch Pierce Fenner & Smith 758,664.389 62.43%
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East
Jacksonville, FL 32246
Cypress Enterprises 110,376.196 9.08%
A Partnership
730 S. Tonti Street
New Orleans, LA 70119
MULTIFLEX FUND
Raymond James Assoc., Inc. 43,290.848 8.36%
Cust. Charles C. Gleason IRA
4629 Rue Bayou
Sanibel, FL 33957
REAL ESTATE FUND
Merrill Lynch Pierce Fenner & Smith 44,612.000 5.28%
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East
Jacksonville, FL 32246
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 87,889.133 15.97%
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
Paul F. Brown, Jr 34,277.544 6.23%
and W. Todd Raible
TTEES Royal Oil & Gas Corp.
PSP & TR DTD 12/27/97
P.O. Box 809
Indiana, PA 15701
</TABLE>
37
<PAGE> 95
<TABLE>
<CAPTION>
CLASS C
LARGE CAP VALUE FUND
<S> <C> <C>
Merrill Lynch Pierce Fenner & Smith 1,104,539.000 16.77%
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
FLEX FUND
Merrill Lynch Pierce Fenner & Smith 3,221,086.124 10.82%
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
MULTIFLEX FUND
Merrill Lynch Pierce Fenner & Smith 2,153,245.000 8.77%
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
REAL ESTATE FUND
Merrill Lynch Pierce Fenner & Smith 172,916.000 6.62%
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 3,327,311.000 54.05%
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
*Beneficial Owner may be deemed to control the Fund by virtue of its ownership
percentage of the outstanding securities of that Fund.
As of December 15, 1997, the officers and Directors of the Company, as
a group, owned less than 1% of the outstanding shares of the Funds.
COMPUTATION OF NET ASSET VALUE
The net asset value per share of each Fund is normally determined
daily as of the close of trading of the NYSE (generally 4:00 p.m. Eastern time)
on each business day of the Fund. In the event the NYSE closes early (i.e.,
before 4:00 p.m. Eastern time) on a particular day, the net asset value of a
Fund is determined as of the close of the NYSE on such day. Net asset value per
share is determined by dividing the value of a
38
<PAGE> 96
Fund's securities, cash and other assets (including interest accrued but not
collected) attributable to a particular class, less all its liabilities
(including accrued expenses and dividends payable) attributable to that class,
by the total number of shares outstanding of that class. Determination of a
Fund's net asset value per share is made in accordance with generally accepted
accounting principles.
Each equity security held by a Fund is valued at its last sales price
on the exchange where the security is principally traded or, lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Each security traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based upon
quotes furnished by market makers for such securities. Each security reported
on the NASDAQ National Market System is valued at the last sales price on the
valuation date or absent a last sales price, at the mean between the closing
bid and asked prices on that day. Debt securities are valued on the basis of
prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices,
and may reflect appropriate factors such as institution-size trading in similar
groups of securities, developments related to special securities, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Securities for which market quotations
are not readily available 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. Short-term obligations having 60 days or
less to maturity are valued on the basis of amortized cost. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S.
Government securities and money market instruments is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of each Fund's shares are
determined at such times. Foreign currency exchange rates are also generally
determined prior the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times
at which such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by or
under the supervision of the Board of Directors.
The net asset value per share of each class of the Funds will not be
calculated on days that the NYSE is closed. These days presently include New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
THE CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of the portfolio securities and cash of the
Funds and maintains certain records on behalf of the Funds. Subject to the
prior approval of the Board of Directors, the custodian may, in the future, use
the services of subcustodians as to one or more of the Funds.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado 80202,
serves as the independent accountants for each of the Funds, providing services
including audit of the annual financial statements, and preparation of tax
returns filed on behalf of the Funds.
39
<PAGE> 97
APPENDIX
Some of the terms used in the Fund's Prospectus and this Statement of
Additional Information are described below.
The term "MONEY MARKET" refers to the marketplace composed of the
financial institutions which handle the purchase and sale of liquid,
short-term, high-grade debt instruments. The money market is not a single
entity, but consists of numerous separate markets, each of which deals in a
different type of short-term debt instrument. These include U.S. Government
obligations, commercial paper, certificates of deposit and bankers'
acceptances, which are generally referred to as money market instruments.
U.S. GOVERNMENT OBLIGATIONS are debt securities (including bills,
notes and bonds) issued by the U.S. Treasury or issued by an agency or
instrumentality of the U.S. Government which is established under the authority
of an Act of Congress. Such agencies or instrumentalities include, but are not
limited to, the Federal National Mortgage Association, Government National
Mortgage Association, the Federal Farm Credit Bank, and the Federal Home Loan
Bank. Although all obligations of agencies, authorities and instrumentalities
are not direct obligations of the U.S. Treasury, payment of the interest and
principal on these obligations is generally backed directly or indirectly by
the U.S. Government. This support can range from the backing of the full faith
and credit of the United States to U.S. Treasury guarantees, or to the backing
solely of the issuing instrumentality itself. In the case of securities not
backed by the full faith and credit of the United States, the investor must
look principally to the agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitments.
BANK OBLIGATIONS include certificates of deposit which are negotiable
certificates evidencing the indebtedness of a commercial bank to repay funds
deposited with it for a definite period of time (usually from 14 days to one
year) at a stated interest rate.
BANKERS' ACCEPTANCES are credit instruments evidencing the obligation
of a bank to pay a draft which has been drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay
the face amount of the instrument upon maturity.
TIME DEPOSITS are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
COMMERCIAL PAPER consists of short-term (usually one to 180 days)
unsecured promissory notes issued by corporations in order to finance their
current operations.
CORPORATE DEBT obligations are bonds and notes issued by corporations
and other business organizations, including business trusts, in order to
finance their long-term credit needs.
CERTIFICATES OF DEPOSIT are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning
a specified return.
MORTGAGE-BACKED securities are interests in a pool of mortgage loans.
Most mortgage securities are pass-through securities, which means that they
provide investors with payments consisting of both principal and interest as
mortgages in the underlying mortgage pool are paid off by the borrowers. The
dominant issuers or guarantors of mortgage securities are the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") are hybrid instruments
with characteristics of both mortgage-backed and mortgage pass-through
securities. Similar to a bond, interest and pre-paid principal on a CMO are
paid, in most cases, semi-annually. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by Funds of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured
into multiple classes, with each class bearing a different stated maturity.
Monthly
40
<PAGE> 98
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired.
MUNICIPAL BONDS are debt obligations which generally have a maturity
at the time of issue in excess of one year and are issued to obtain funds for
various public purposes. The two principal classifications of municipal bonds
are "general obligation" and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of facilities, or, in some
cases, from the proceeds of a special excise or specific revenue source.
Industrial development bonds or private activity bonds are issued by or on
behalf of public authorities to obtain funds for privately operated facilities
and are, in most cases, revenue bonds which do not generally carry the pledge
of the full faith and credit of the issuer of such bonds, but depend for
payment on the ability of the industrial user to meet its obligations (or any
property pledged as security).
ZERO COUPON BONDS are debt obligations issued without any requirement
for the periodic payment of interest. Zero coupon bonds are issued at a
significant discount from face value. The discount approximates the total
amount of interest the bonds would accrue and compound over the period until
maturity at a rate of interest reflecting the market rate at the time of
issuance. A Fund, if it holds zero coupon bonds in its Fund, however, would
recognize income currently for Federal tax purposes in the amount of the
unpaid, accrued interest (determined under tax rules) and generally would be
required to distribute dividends representing such income to shareholders
currently, even though funds representing such income would not have been
received by the Fund. Cash to pay dividends representing unpaid, accrued
interest may be obtained from sales proceeds of Fund securities and Fund shares
and from loan proceeds. Because interest on zero coupon obligations is not paid
to the Fund on a current basis but is in effect compounded, the value of the
securities of this type is subject to greater fluctuations in response to
changing interest rates than the value of debt obligations which distribute
income regularly.
RATINGS OF CORPORATE DEBT OBLIGATIONS Except as to the Cash Management
Fund, Fund purchases of taxable obligations are not limited to those
obligations rated within the four highest categories by Moody's and S&P.
However, the Flex Fund's and Income Fund's standards for investment grade
obligations are generally similar to those standards included in the four
highest categories by Moody's and S&P. The Cash Management Fund will limit its
investments to those obligations within the two highest categories. The
Relative Return Bond Fund may invest up to 10% of Fund assets in corporate
bonds rated below Baa by Moody's or below BBB by S&P but rated at least Ba by
Moody's or BB by S&P. The MultiFlex Fund may invest up to 5% of Fund assets in
corporate bonds rated below Baa by Moody's or below BBB by S&P, but rated at
least Ba by Moody's or BB by S&P.
The characteristics of corporate debt obligations rated by Moody's are
generally as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
41
<PAGE> 99
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements. The future of such bonds cannot be considered as well assured.
B -- Bonds which are rated B generally lack characteristics of a
desirable investment.
Caa -- Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds rated Ca are speculative to a high degree.
C -- Bonds rated C are the lowest rated class of bonds and are
regarded as having extremely poor prospects.
The characteristics of corporate debt obligations rated by S&P are
generally as follows:
AAA -- This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
BB -- Debt rated BB is predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with terms of the
obligation. BB indicates the lowest degree of speculation; CC indicates the
highest degree of speculation.
BB,B,CCC,CC -- Debt in these ratings is predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with
terms of the obligation. BB indicates the lowest degree of speculation and CC
the highest.
A bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer
or obtained by the rating services from other sources which they consider
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of, such information, or for other reasons.
RATINGS OF COMMERCIAL PAPER. Cash Management Fund purchases are
limited to those instruments rated A-1 by S&P and Prime 1 by Moody's.
42
<PAGE> 100
Commercial paper rated A-1 by Standard & Poor's has the following
characteristics: liquidity ratios are adequate to meet cash requirements; the
issuer's long-term debt is rated "A" or better; the issuer has access to at
least two additional channels of borrowing; and basic earnings and cash flow
have an upward trend with allowances made for unusual circumstances. Typically,
the issuer's industry is well established and the issuer has a strong position
within the industry.
Commercial paper rated Prime 1 by Moody's is the highest commercial
paper assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and consumer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determine how the issuer's commercial
paper is rated within various categories.
DETERMINATION OF CREDIT QUALITY OF UNRATED SECURITIES. In determining
whether an unrated debt security is of comparable quality to a rated security,
the sub-adviser may consider the following factors, among others:
(1) other securities of the issuer that are rated;
(2) the issuer's liquidity, debt structure, repayment schedules,
and external credit support facilities;
(3) the reliability and quality of the issuer's management;
(4) the length to maturity of the security and the percentage of
the Fund represented by securities of that issuer;
(5) the issuer's earnings and cash flow trends;
(6) the issuer's industry, the issuer's position in its industry,
and an appraisal of speculative risks which may be inherent
in the industry;
(7) the financial strength of the issuer's parent and its
relationship with the issuer;
(8) the extent and reliability of credit support, including a
letter of credit or third party guarantee applicable to
payment of principal and interest;
(9) the issuer's ability to repay its debt from cash sources or
asset liquidation in the event that the issuer's backup
credit facilities are unavailable;
(10) other factors deemed relevant by the subadvisor.
43
<PAGE> 101
FINANCIAL STATEMENTS
FS
<PAGE> 102
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
1. Financial statements and schedules included in
Prospectus (Part A):
Financial information for the last 10 years or since
inception, as applicable, through the period ended
December 31, 1997 for AIM Advisor Large Cap Value
Fund, AIM Advisor Flex Fund, AIM Advisor MultiFlex
Fund, AIM Advisor Real Estate Fund and AIM Advisor
International Value Fund (formerly, Equity, Flex,
MultiFlex, Real Estate and International Value
Portfolios, respectively).
2. Financial statements and schedules included in
Statement of Additional Information (Part B):
The following audited financial statements of the
Fund and the notes thereto for the fiscal year ended
December 31, 1997 and the report of Price Waterhouse
LLP with respect to such financial statements are
included in the Statement of Additional Information;
the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1997; Statement of
Investment Securities as of December 31, 1997;
Statement of Assets and Liabilities as of December
31, 1997; Statement of Operations for the fiscal
period ended December 31, 1997; Statement of Changes
in Net Assets for each of the two years ended
December 31, 1997 and December 31, 1996, as
applicable; Financial Highlights for the last five
years or since inception, as applicable, through the
period ended December 31, 1997.
3. Financial statements and schedules included in Part
C:
None: Schedules have been omitted as all information
has been presented in the financial statements.
(b) Exhibits:
1. (a) Amended and Restated Articles of
Incorporation dated March 7, 1995, previously
filed with Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on
May 1, 1995, and are filed herewith
electronically.
(b) Articles of Amendment to the Articles of
Incorporation filed on EDGAR with Post-
Effective Amendment No. 26 on April 22, 1996,
and incorporated by reference herein.
(c) Articles Supplementary to the Articles of
Incorporation dated August 13, 1996 filed on
EDGAR with Post-Effective Amendment No. 27 on
August 30, 1996, and herein incorporated by
reference.
(d) Articles Supplementary, dated September 29,
1997, to the Articles of Incorporation are
filed herewith electronically.
2. (a) By-Laws of Registrant, as amended, previously
filed with Post-Effective Amendment No. 24
to the Registrant's Registration Statement on
May 1,
C-1
<PAGE> 103
1995, was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997 and herein
incorporated by reference.
(b) Amended and Restated Bylaws of Registrant,
dated September 20, 1997 is filed herewith
electronically.
3. Not applicable.
4. Not applicable.
5. (a) Investment Advisory Agreement between
Registrant and INVESCO Services, Inc. dated
as of February 28, 1997 was filed on EDGAR
with Post-Effective Amendment No. 31 on April
30, 1997.
(b) Investment Advisory Agreement between
Registrant and A I M Advisors, Inc. dated
August 4, 1997 is filed herewith
electronically.
(c) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Capital
Management, Inc. dated as of February 28,
1997 was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997.
(d) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Capital
Management, Inc. dated August 4, 1997 is
filed herewith electronically.
(e) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Management &
Research, Inc. dated as of February 28, 1997
was filed on EDGAR with Post-Effective
Amendment No. 31 on April 30, 1997.
(f) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Management &
Research, Inc. dated August 4, 1997 is filed
herewith electronically.
(g) Sub-Advisory Agreement between INVESCO
Services, Inc. and INVESCO Realty Advisors,
Inc. dated as of February 28, 1997 was filed
on EDGAR with Post-Effective Amendment No. 31
on April 30, 1997.
(h) Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Realty Advisors,
Inc. dated August 4, 1997 is filed herewith
electronically.
(i) Form of Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Global Asset
Management, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 32
on June 9, 1997.
6. (a) Distribution Agreement between Registrant and
INVESCO Services, Inc., dated as of February
28, 1997 was filed on EDGAR with
Post-Effective Amendment No. 31 on April 30,
1997.
(b) Distribution Agreement between Registrant and
A I M Distributors, Inc. dated August 4, 1997
is filed herewith electronically.
(c) Form of Master Distribution Agreement between
Registrant and A I M Distributors, Inc.
(relating to Class B shares) is filed
herewith electronically.
C-2
<PAGE> 104
(d) Form of Selected Dealer Agreement between
A I M Distributors, Inc. and selected dealers
is filed herewith electronically.
(e) Form of Bank Selling Group Agreement between
A I M Distributors, Inc. and banks is filed
herewith electronically.
7. (a) Defined Benefit Deferred Compensation Plan
for Non-Interested Directors and Trustees was
filed on EDGAR with Post-Effective Amendment
No. 31 on April 30, 1997.
(b) Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors for
Non-Interested Directors and Trustees was
filed electronically as an Exhibit to Post-
Effective Amendment No. 32 on June 9, 1997
and is hereby incorporated by reference.
(c) Retirement Plan for Registrant's
Non-Affiliated Directors effective as of
March 8, 1994 as restated September 18, 1997
was filed electronically as an Exhibit to
Post- Effective Amendment No. 32 on June 9,
1997 and is hereby incorporated by reference.
8. (a) Form of Custodian Agreement between
Registrant and United Missouri Bank of Kansas
City, N.S., dated as of November 1, 1993,
previously filed with Post-Effective
Amendment No. 20 to the Registrant's
Registration Statement on September 10, 1993
and herein incorporated by reference.
Custodian Agreement between Registrant and
United Missouri Bank of Kansas City, N.S.,
dated as of November 1, 1993, previously
filed with Post-Effective Amendment No. 22 to
the Registrant' Registration Statement on
April 28, 1994 and herein incorporated by
reference. Form of Custodian Agreement
between Registrant and United Missouri Bank,
dated May 1, 1995, previously filed with
Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on May 1,
1995 and herein incorporated by reference
filed on EDGAR with Post-Effective Amendment
No. 26 on April 22, 1996.
(b) Form of Custodian Contract between Registrant
and State Street Bank and Trust Company is
filed herewith electronically.
9. (a) Operating Services Agreement between
Registrant and INVESCO Services, Inc., dated
as of February 28, 1997 was filed on EDGAR
with Post-Effective Amendment No. 31 on April
30, 1997.
(b) Operating Services Agreement between
Registrant and A I M Advisors, Inc. dated
August 4, 1997 is filed herewith
electronically.
(c) Transfer Agency and Service Agreement between
Registrant, A I M Advisors, Inc. and A I M
Fund Services, Inc. dated August 4, 1997, is
filed herewith electronically.
10. Opinion and Consent of Ballard Spahr Andrews
& Ingersoll is filed herewith electronically.
11. Consent of Price Waterhouse LLP is filed
herewith electronically.
12. Not applicable.
C-3
<PAGE> 105
13. Not applicable.
14. Not applicable.
15. (a) Plan and Agreement of Distribution pursuant
to Rule 12b-1 between the Registrant and
INVESCO Services, Inc., dated as of January
1, 1997 was filed on EDGAR with Post-
Effective Amendment No. 31 on April 30,
1997.
(b) Plan and Agreement of Distribution pursuant
to Rule 12b-1 between the Registrant (on
behalf of Class A and Class C shares) and
A I M Distributors, Inc. dated August 4,
1997 is filed herewith electronically.
(c) Form of Master Distribution Plan of the
Registrant (on behalf of Class B shares) is
filed herewith electronically.
(d) Form of Shareholder Service Agreement to be
used in connection with Registrant's Master
Distribution Plan is filed herewith
electronically.
(e) Form of Bank Shareholder Service Agreement
to be used in connection with Registrant's
Master Distribution Plan is filed herewith
electronically.
(f) Form of Variable Group Annuity
Contractholder Service Agreement to be used
in connection with Registrant's Master
Distribution Plan is filed herewith
electronically.
(g) Form of Service Agreement of Bank Trust
Departments and for Brokers for Bank Trust
Departments to be used in connection with
Registrant's Master Distribution Plan are
filed herewith electronically.
16. Schedule of Performance Quotations were
filed as Exhibits to Post-Effective
Amendment No. 26 on April 22, 1996, and
incorporated by reference herein.
18. (a) Plan Pursuant To Rule 18f-3 under the
Investment Company Act of 1940 by the
Registrant adopted by the Board of
Directors was filed on EDGAR with
Post-Effective Amendment No. 31 on April
30, 1997.
(b) Second Amended and Restated Multiple Class
Plan (Rule 18f-3) (effective September 1,
1997) is filed herewith electronically.
27. Financial Data Schedule - None.
Item 25. Persons Controlled by or Under Common Control With Registrant
Furnish a list or diagram of all persons directly or
indirectly controlled by or under common control with the
Registrant and as to each such person indicate (1) if a
company, the state or other sovereign power under the laws of
which it is organized, and (2) the percentage of voting
securities owned or other basis of control by the person, if
any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the
number of record holders of each class of securities of the
Registrant.
C-4
<PAGE> 106
Title of Series Number of Record Holders* as of
December 15, 1997
Class A Class C
Large Cap Value Fund 332 1,841
Flex Fund 208 6,253
MultiFlex Fund 520 5,352
Real Estate Fund 1,315 1,620
International Value 572 1,524
* No Class B shares were outstanding as of December 15, 1997
Item 27. Indemnification
Section 2-418 of the General Corporation Law of the State of
Maryland, Article VI of the Registrant's Charter filed as
Exhibit 1, Article VII of the Registrant's By-Laws filed as
Exhibit 2, and the Investment Advisory Agreement filed as
Exhibit 5(a), provide, or will provide, for indemnification.
The Registrant's Articles of Incorporation (Article VI)
provide that the Registrant shall indemnify (a) its directors
to the fullest extent permitted by law now or hereafter in
force, including the advance of expenses under the procedures
provided under such laws; (b) its officers to the same extent
it shall indemnify its directors; and (c) its officers who are
not directors to such further extent as shall be authorized by
the Board of Directors and be consistent with law, provided,
however, that such indemnification shall not be construed to
protect any director or officer against any liability to which
such director 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.
The Registrant's By-laws (Article VII) provide that the
Registrant shall indemnify any director and/or officer who was
or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the
fact that he is or was a director or officer of the
Registrant, or is or was serving at the request of the
Registrant as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding to the
maximum extent permitted by law.
With respect to indemnification of officers and directors,
Section 2-418 of the Maryland General Corporation Law provides
that a corporation may indemnify any director who is made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Registrant) by reason of service in that capacity, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement and expenses actually and
reasonably incurred by him in connection with such action,
suit or proceeding unless (1) it is established that the act
or omission of the director was material to the matter giving
rise to the proceeding, and (a) was committed in bad faith or
(b) was the result of active and deliberate dishonesty; or (2)
the director actually received an improper personal benefit of
money, property, or services; or (3) in the case of any
criminal action or proceeding, had reasonable cause to believe
that the act or omission was unlawful. A court of appropriate
jurisdiction may, however, except in
C-5
<PAGE> 107
proceedings by or in the right of the Registrant or in which
liability has been adjudged by reason of the person receiving
an improper personal benefit, order such indemnification as the
court shall deem proper if it determines that the director is
fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not the director has
met the requisite standards of conduct. Under Section 2-418,
the Registrant shall also indemnify officers, employees, and
agents of the Registrant to the same extent that it shall
indemnify directors, and officers, employees and agents who are
not directors to such further extent, consistent with law, as
may be provided by general or specific action of the Board of
Directors or contract. Pursuant to Section 2-418 of the
Maryland General Corporation Law, the termination of any
action, suit or proceeding by judgment, order or settlement
does not create a presumption that the person did not meet the
requisite standard of conduct required by Section 2-418. The
termination of any action, suit or 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.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue. Insurance coverage is provided under a joint Mutual
Fund & Investment Advisory Professional and Directors &
Officers Liability Policy, issued by ICI Mutual Insurance
company, with a $25,000,000 limit of liability.
Item 28. Business and Other Connections of Investment Advisor and
Sub-Advisor
See "Management" in the Prospectus and "The Advisory and
Sub-Advisory Agreements" in the Statement of Additional
Information for information regarding the business of the
investment advisor and sub-advisors. The only employment of
a substantial nature of the Advisor's directors and officers
is with the Advisor and its affiliated companies. For
information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of INVESCO Capital Management, Inc., INVESCO Global
Asset Management Limited, INVESCO Management & Research, Inc.,
and INVESCO Realty Advisors, Inc., reference is made to Form
ADV filed under the Investment Advisers Act of 1940 by INVESCO
Capital Management, Inc., INVESCO Global Asset Management
Limited, INVESCO Management & Research, Inc. and INVESCO
Realty Advisors, Inc., herein incorporated by reference.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter of its Retail Classes, also acts as a
principal underwriter to the following investment
companies:
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
C-6
<PAGE> 108
AIM Investment Securities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(b)
<TABLE>
<CAPTION>
Name and Positions and Positions and
Principal Business Offices with Offices with
Address* Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman of the Board
of Directors
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director President & Director
W. Gary Littlepage Senior Vice President & Director None
James L. Salners Senior Vice President & Director None
John Caldwell Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller First Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
John J. Arthur Vice President & Treasurer Senior Vice President &
Treasurer
Mary K. Coleman Vice President None
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
B.J. Thompson Vice President None
Robert D. Van Sant, Jr. Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Luke Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri L. Fiedler Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
</TABLE>
- -------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE> 109
<TABLE>
<CAPTION>
Name and Positions and Positions and
Principal Business Offices with Offices with
Address* Underwriter Registrant
- ------- ------------- -------------
<S> <C> <C>
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathryn Jordan Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Terri L. Ransdell Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Christopher T. Simutis Assistant Vice President None
Gary K. Wendler Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
- ---------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, 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,
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, and the Registrant's Transfer Agent and Dividend
Paying Agent, A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management
related service contract not discussed in Part I of this Form (because
the contract was not believed to be material to a purchaser of
securities of the Registrant) under which services are provided to the
Registrant, indicating the parties to the contract, the total dollars
paid and by whom, for the last three fiscal years.
None.
Item 32. Undertakings
Registrant undertakes to furnish to each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
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<PAGE> 110
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 30th day of
December, 1997.
REGISTRANT: AIM ADVISOR FUNDS, INC.
By: /s/ Robert H. Graham
-----------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Charles T. Bauer Chairman & Director December 30, 1997
- --------------------------------------------
(Charles T. Bauer)
/s/ Robert H. Graham Director & President December 30, 1997
- -------------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
Director
-------------------------------------------
(Bruce L. Crockett)
Director
- --------------------------------------------
(Owen Daly II)
/s/ Jack Fields Director December 30, 1997
- --------------------------------------------
(Jack Fields)
/s/ Carl Frischling Director December 30, 1997
- --------------------------------------------
(Carl Frischling)
Director
- --------------------------------------------
(John F. Kroeger)
/s/ Lewis F. Pennock Director December 30, 1997
- --------------------------------------------
(Lewis F. Pennock)
Director
- --------------------------------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Director December 30, 1997
- --------------------------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ John J. Arthur Treasurer (Principal Financial December 30, 1997
- -------------------------------------------- and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 111
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1(a) Amended and Restated Articles of Incorporation dated March 7, 1995, previously filed with Post-
Effective Amendment No. 24 to the Registrant's Registration Statement on May 1, 1995
1(d) Articles Supplementary, dated September 29, 1997, to the Articles of Incorporation
2(b) Amended and Restated Bylaws, dated September 20, 1997
5(b) Investment Advisory Agreement between Registrant and A I M Advisors, Inc. dated August 4, 1997
5(d) Sub-Advisory Agreement between A I M Advisors, Inc. and INVESCO Capital Management, Inc. dated August
4, 1997
5(f) Sub-Advisory Agreement between A I M Advisors, Inc. and INVESCO Management & Research, Inc. dated
August 4, 1997
5(h) Sub-Advisory Agreement between A I M Advisors, Inc. and INVESCO Realty Advisors, Inc. dated August 4,
1997
6(b) Distribution Agreement between Registrant and A I M Distributors, Inc. dated August 4, 1997
6(c) Form of Master Distribution Agreement between Registrant and A I M Distributors, Inc. (relating to
Class B shares)
6(d) Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers
6(e) Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks
8(b) Form of Custodian Contract between Registrant and State Street Bank and Trust Company
9(b) Operating Services Agreement between Registrant and A I M Advisors, Inc. dated August 4, 1997
9(c) Transfer Agency and Service Agreement between Registrant, A I M Advisors, Inc. and
A I M Fund Services, Inc. dated August 4, 1997
10 Opinion and Consent of Ballard Spahr Andrews & Ingersoll
11 Consent of Price Waterhouse LLP
15(b) Plan and Agreement of Distribution pursuant to Rule 12b-1 between the Registrant (on behalf of Class A
and Class C shares) and A I M Distributors, Inc. dated August 4, 1997
15(c) Form of Master Distribution Plan of the Registrant (on behalf of Class B shares)
15(d) Form of Shareholder Service Agreement to be used in connection with Registrant's Master Distribution
Plan
15(e) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan
15(f) Form of Variable Group Annuity Contractholder Service Agreement to be used in connection with
Registrant's Master Distribution Plan
15(g) Form of Service Agreement of Bank Trust Departments and for Brokers for Bank Trust Departments to be
used in connection with Registrant's Master Distribution Plan
18(b) Second Amended and Restated Multiple Class Plan (Rule 18f-3) (effective September 1, 1997)
</TABLE>
<PAGE> 1
EXHIBIT 1(a)
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
THE ARTICLES OF INCORPORATION
OF
THE EBI FUNDS, INC.
THE UNDERSIGNED, Hubert L. Harris, Jr., being the President of THE EBI
FUNDS, INC. (hereinafter the "Corporation"), hereby certifies that:
(1) The Articles of Incorporation of the Corporation were filed on
September 19, 1989, and Articles Supplementary were filed on June 30, 1993,
November 17, 1993 and March __, 1995 with the State Department of Assessments
and Taxation;
(2) The Corporation desires to amend and restate its Articles of
Incorporation;
(3) This Amendment and Restatement of the Corporation's Articles of
Incorporation has been approved by a majority of the Board of Directors of the
Corporation;
(4) The amendments are limited to changes expressly permitted by Section
2-605(4) of the Maryland General Corporation Law to be made without action by
the stockholders;
(5) The Corporation is registered as an open-end investment company under
the Investment Company Act of 1940;
(6) The current address of the principal office of the Corporation is
1315 Peachtree Street, N.E., Atlanta, Georgia 30309;
(7) The Corporation's current resident agent is The Corporation Trust,
Incorporated, 32 South Street, Baltimore Maryland 21202;
(8) There are eleven (11) current directors of the Corporation, whose
names are as follow:
Charles W. Brady
Fred A. Deering
Hubert L. Harris, Jr.
Victor L. Andrews
Bob R. Baker
Lawrence H. Budner
Daniel D. Chabris
Kenneth T. King
Frank M. Bishop
A. D. Frazier, Jr.
John W. McIntyre
<PAGE> 2
(9) The text of the Articles of Incorporation is hereby amended and
restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is The EBI Funds, Inc. (the "Corporation").
ARTICLE II
CORPORATE PURPOSES
The purpose for which the Corporation is formed is to engage in the
business of an open-end management investment company.
The Corporation may engage in any other business and shall have all powers
conferred upon or permitted to corporations by the Maryland General Corporation
Law.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The present address of the principal office of the Corporation is 1315
Peachtree Street, N.E., Atlanta, Georgia 30309. The name of the resident agent
of the Corporation in Maryland is The Corporation Trust, Incorporated, and the
address of the resident agent is 32 South Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation.
ARTICLE IV
CAPITAL STOCK AND STOCKHOLDERS
Section 1. Authorized Shares. The Corporation is authorized to issue
Ten Billion Seventy Million (10,070,000,000) shares of Common Stock par value
$.001 per share. The aggregate par value of all shares which the Corporation is
authorized to issue is Ten Million Seventy Thousand Dollars ($10,070,000).
Subject to the following paragraph, the authorized shares are classified
as 10,000,000 shares of the Equity Portfolio, 10,000,000 shares of the Income
Portfolio, 10,000,000 shares of the Flex Portfolio, 10,000,000 shares of the
MultiFlex Portfolio, 10,000,000 shares of the Relative Return Bond Portfolio,
10,000,000 shares of the Real Estate Portfolio, 10,000,000 shares of the
International Value Portfolio, and 10,000,000 shares of the Cash Management
Portfolio.
- 2 -
<PAGE> 3
The Board of Directors is authorized to classify or to reclassify, from
time to time, any unissued shares of stock of the Corporation, whether now or
hereafter authorized, by setting, changing or eliminating the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms and conditions of or rights to require
redemption of the stock.
The provisions of these Articles of Incorporation, including those in
this Section, shall apply to each class of stock unless otherwise provided by
the Board of Directors prior to issuance of any shares of that class:
(a) As more fully set forth hereafter, the assets and liabilities
and the income and expenses of each class of the Corporation's stock shall be
determined separately and, accordingly, the net asset value, the dividends
payable to holders, and the amounts distributable in the event of dissolution
of the Corporation to holders of shares of the Corporation's stock may vary
from class to class. Except for these differences and certain other differences
hereafter set forth, each class of the Corporation's stock shall have the same
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of and
rights to require redemption.
(b) All consideration received by the Corporation for the issue or
sale of shares of a class of the Corporation's stock, together with all funds
derived from any investment and reinvestment thereof, shall irrevocably belong
to that class for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the Corporation. Such
consideration and any funds derived from any investment and reinvestment are
herein referred to as "assets belonging to" that class.
(c) The assets belonging to a class of the Corporation's stock shall
be charged with the liabilities of the Corporation with respect to that class
and with that class' share of the liabilities of the Corporation not
attributable to any particular class, in the latter case in the proportion
that the net asset value of that class (determined without regard to such
liabilities) bears to the net asset value of all classes of the Corporation's
stock (determined without regard to such liabilities). The determination of
the Board of Directors shall be conclusive as to the allocation of
liabilities, including accrued expense and reserves, to the assets to a
particular class or classes.
(d) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or in cash or both, as
-3-
<PAGE> 4
may be declared from time to time by the Board of Directors with respect to
such class. Dividends or distributions shall be paid on shares of a class of
stock only out of the assets belonging to that class.
(e) All holders of shares of stock shall vote as a single class except
with respect to any matter which affects only one or more classes of stock, in
which case only the holders of shares of the classes affected shall be entitled
to vote.
(f) In the event of the liquidation or dissolution of the Corporation,
the stockholders of a class of the Corporation's stock shall be entitled to
receive, as a class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that class less the
liabilities allocated to that class. The assets so distributable to the
stockholders of a class shall be distributed among such stockholders in
proportion to the number of shares of that class held by them and recorded on
the books of the Corporation. In the event that there are any assets available
for distribution that are not attributable to any particular class of stock,
such assets shall be allocated to all classes in proportion to the net asset
value of the respective classes.
Section 2. Fractional Shares. The Corporation may issue fractional
shares. Any fractional share shall carry proportionately all the rights of a
whole share, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
Section 3. Quorum Requirements. The presence in person or by proxy
of the holders of one-third of the shares of stock of the Corporation entitled
to vote without regard to class shall constitute a quorum at any meeting of the
stockholders, except with respect to any matter which by law requires the
approval of one or more classes of stock, in which case the presence in person
or by proxy of the holders of one-third of the shares of stock of each class
entitled to vote on the matter shall constitute a quorum.
Section 4. Voting. Notwithstanding any provision of the laws of the
State of Maryland requiring any action to be taken or authorized by the
affirmative vote of the holders of more than a majority of the outstanding
stock of the Corporation, that action shall, except to the extent otherwise
required by the Investment Company Act of 1940, be effective and valid if taken
or authorized by the affirmative vote of the holders of the majority of the
total number of votes entitled to be cast thereon.
- 4 -
<PAGE> 5
Section 5. No Preemptive Rights. No holder of shares of stock of the
Corporation shall be entitled to any preemptive right other than as the Board
of Directors may establish.
Section 6. Redemption of Stock. Each stockholder may require the
Corporation to redeem all or any part of the stock owned by that holder, upon
request to the Corporation or its designated agent, at the net asset value of
the shares of that class next determined following receipt of the request in a
form approved by the Corporation and accompanied by surrender of the
certificate or certificates for the share, if any. The Board of Directors may
establish procedures for redemption of stock. Payment of the redemption price
by the Corporation or its designated agent shall be made within seven days
after redemption. The right of redemption may be suspended and payment of the
redemption price may be postponed when permitted or required by applicable law.
The right of a holder of stock redeemed by the Corporation to receive dividends
thereon and all other rights with respect to the shares shall terminate at the
time as of which the redemption price has been determined, except the right to
receive the redemption price and any dividend or distribution to which that
holder had become entitled as the record holder of the shares on the record date
for that dividend.
Section 7. Determinations by Board of Directors. Any determination
made in good faith by or pursuant to the direction of the Board of Directors as
to the amount of the assets, debts, obligations or liabilities of the
Corporation, as to the amount of any reserves or charges set up and the
proprietary use thereof, as to the time of or purpose for creating such reserves
or charges as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment or other asset owned or held by the
Corporation, as to the number of shares of any class of stock outstanding, as to
the income of the Corporation or as to any other matter relating to the
determination of net asset value, the declaration of dividends or the issue,
sale, redemption or other acquisition of shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation and all holders
of its shares, past, present and future, and shares of the Corporation are
issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
-5-
<PAGE> 6
ARTICLE V
BOARD OF DIRECTORS
Section 1. Number of Directors. The number of Directors in office
may be changed from time to time in the manner specified in the By-Laws of the
Corporation, but this number shall never be less than the minimum number
required under the Maryland General Corporation Law.
Section 2. Certain Powers of Board of Directors. In addition to its
other powers explicitly or implicitly granted under these Articles of
Incorporation, by law or otherwise, the Board of Directors of the Corporation
(a) is expressly authorized to make, alter, amend or repeal the By-Laws of the
Corporation, (b) may from time to time determine whether, to that extent, at
what time and places, and under what conditions and regulations the accounts
and books of the Corporation, or any of them, shall be open to the inspection
of the stockholders, and no stockholder shall have any right to inspect any
account, book or document of the Corporation except as conferred by statute or
as authorized by the Board of Directors of the Corporation, (c) is empowered to
authorize, without stockholder approval, the issuance and sale from time to
time of shares of stock of the Corporation whether now or hereafter authorized,
and (d) is authorized to adopt procedures for determination of and to maintain
constant the net asset value of shares of the Corporation's stock.
ARTICLE VI
LIABILITY AND INDEMNIFICATION
(a) To the fullest extent that limitations on the liability of directors
and officers are permitted by the Maryland General Corporation Law, no director
or officer of the Corporation shall have any liability to the Corporation or
its stockholders for damages. This limitation on liability applies to events
occurring at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at the time of
any proceeding in which liability is asserted.
(b) The Corporation shall indemnify and advance expenses to its currently
acting and its former directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify and advance expenses to its officers to the same extent as its
directors and may do so to such further extent as is consistent with law. The
Board of Directors may by By-law, resolution, or agreement make further
provision for indemnification of directors,
- 6 -
<PAGE> 7
officers, employees and agents to the fullest extent permitted by the Maryland
General Corporation Law.
(c) No provision of this Article shall be effective to protect or purport
to protect any director or officer of the Corporation against any liability to
the Corporation or its security holders 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.
(d) References to the Maryland General Corporation Law in this Article
are to that law as from time to time amended. No amendment to the charter of
the Corporation shall affect any right of any person under this Article based
on any event, omission or proceeding prior to the amendment.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment
of these Articles of Incorporation now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in these
Articles of Incorporation, of any outstanding capital stock.
I have signed these Articles of Amendment and Restatement of the Articles
of Incorporation of the Corporation on March 1, 1995 and acknowledge the same
to by my act.
[CORPORATE SEAL] THE EBI FUNDS, INC.
/s/ HUBERT L. HARRIS, JR.
----------------------------------------
Hubert L. Harries, Jr.
President
ATTEST:
By: /s/ PENELOPE P. ALEXANDER
-------------------------------
Penelope P. Alexander
Secretary
- 7 -
<PAGE> 1
EXHIBIT 1(d)
AIM ADVISOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM ADVISOR FUNDS, INC., a Maryland corporation registered as an
open-end investment company under the Investment Company Act of 1940, as
amended, having its principal office in the State of Maryland in Baltimore City
(hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation has adopted
resolutions to reclassify a portion of the Corporation's authorized capital of
unissued shares of Common Stock and to ratify and confirm the issuance of
shares of Common Stock of the Fund, of whatever series or portfolio, as
reflected in the records of the Fund, and to further declare and confirm that
each such share is duly authorized, validly issued, fully paid and
nonassessable.
SECOND: Immediately prior to the filing of these Articles
Supplementary, the Corporation had authority to issue 10,075,000,000 shares of
Common Stock with a par value of $0.001 per share and having an aggregate par
value of $10,075,000. Of these shares:
<PAGE> 2
(a) 5,000,000 shares have been classified as AIM Advisor
Large Cap Value Fund - Class A Shares, 5,000,000 shares have been classified as
AIM Advisor Income Fund - Class A Shares, 7,500,000 shares have been classified
as AIM Advisor Flex Fund - Class A Shares, 5,000,000 shares have been
classified as AIM Advisor MultiFlex Fund - Class A Shares, 5,000,000 shares
have been classified as AIM Advisor Real Estate Fund - Class A Shares,
5,000,000 shares have been classified as AIM Advisor International Value Fund -
Class A Shares, and 5,000,000,000 shares have been classified as AIM Advisor
Cash Management Fund - Class A Shares; and
(b) 5,000,000 shares have been classified as AIM Advisor
Large Cap Value Fund - Class C Shares, 5,000,000 shares have been classified as
AIM Advisor Income Fund - Class C Shares, 12,500,000 shares have been
classified as AIM Advisor Flex Fund - Class C Shares, 10,000,000 shares have
been classified as AIM Advisor MultiFlex Fund - Class C Shares, 5,000,000
shares have been classified as AIM Advisor Real Estate Fund - Class C Shares,
5,000,000 shares have been classified as AIM Advisor International Value Fund -
Class C Shares, and 5,000,000,000 shares have been classified as AIM Advisor
Cash Management Fund - Class C Shares.
THIRD: As of the filing of these Articles Supplementary, the
Corporation shall have authority to issue 10,075,000,000 shares of Common Stock
with a par value of $0.001 per share and having an aggregate par value of
$10,075,000. Of these shares:
2
<PAGE> 3
(a) 100,000,000 shares have been classified as AIM
Advisor Large Cap Value Fund - Class A Shares, 5,000,000 shares have been
classified as AIM Advisor Income Fund - Class A Shares, 100,000,000 shares have
been classified as AIM Advisor Flex Fund - Class A Shares, 100,000,000 shares
have been classified as AIM Advisor MultiFlex Fund - Class A Shares,
100,000,000 Shares have been classified as AIM Advisor Real Estate Fund - Class
A Shares, 100,000,000 shares have been classified as AIM Advisor International
Value Fund - Class A Shares, and 4,000,000,000 shares have been classified as
AIM Advisor Cash Management Fund - Class A Shares;
(b) 100,000,000 shares have been classified as AIM
Advisor Large Cap Value Fund - Class B Shares, 100,000,000 shares have been
classified as AIM Advisor Flex Fund - Class B Shares, 100,000,000 shares have
been classified as AIM Advisor MultiFlex Fund - Class B Shares, 100,000,000
Shares have been classified as AIM Advisor Real Estate Fund - Class B Shares,
and 100,000,000 shares have been classified as AIM Advisor International Value
Fund - Class B Shares;
(c) 100,000,000 shares have been classified as AIM
Advisor Large Cap Value Fund - Class C Shares, 5,000,000 shares have been
classified as AIM Advisor Income Fund - Class C Shares, 100,000,000 shares have
been classified as AIM Advisor Flex Fund - Class C Shares, 100,000,000 shares
have been classified as AIM Advisor MultiFlex Fund - Class C Shares,
100,000,000 shares have been classified
3
<PAGE> 4
as AIM Advisor Real Estate Fund - Class C Shares, 100,000,000 shares have been
classified as AIM Advisor International Value Fund - Class C Shares, and
4,000,000,000 shares have been classified as AIM Advisor Cash Management Fund -
Class C Shares; and
(d) 565,000,000 shares are shares of stock without
further designation or classification.
FOURTH: Unissued shares of Common Stock may be classified and
reclassified by the Board of Directors.
FIFTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Class A and Class C Shares of Common Stock
described in ARTICLE THIRD hereof are as set forth in ARTICLE IV of the
Corporation's Charter, and in the provisions relating to stock of the
Corporation generally, and in ARTICLE FIFTH of the Corporation's Articles
Supplementary as filed with the State Department of Assessments and Taxation of
the State of Maryland on June 13, 1997, and remain unchanged.
SIXTH: Except as set forth below, the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and
4
<PAGE> 5
conditions of redemption of the Class B Shares of Common Stock described in
ARTICLE THIRD hereof are those set forth in ARTICLE IV of the Corporation's
Charter, and in the provisions relating to stock of the Corporation generally.
In addition, all such Class B Shares shall have the following preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption:
(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 preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of Class B Shares generally.
5
<PAGE> 6
(c) If a series of the Corporation implements any amendment to a
Rule 12b-1 Plan (or, if presented to shareholders, adopts or implements a
non-Rule 12b-1 shareholder services plan) that the Board of Directors
determines would materially increase the charges that may be borne by the
holders of Class A Shares 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 Board of Directors shall have sole
discretion in determining whether such amendment or adoption is submitted to a
vote of the holders of Class B Shares. Should such amendment or adoption not
be submitted to a vote of the holders of Class B Shares or, if submitted,
should the holders of Class B Shares fail to approve such amendment or
adoption, the Board of Directors 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 adoptions; 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 Board of Directors to implement the foregoing, and
at the sole discretion of the Board of Directors, such action may include the
exchange or conversion of all Class B Shares for or into a new class (the "New
Class B Shares"), identical in all 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 Board of
Directors reasonably believes will not be subject to federal taxation;
6
<PAGE> 7
SEVENTH: The shares of the Corporation authorized and classified or
reclassified pursuant to these Articles Supplementary have been so authorized
and classified or reclassified by the Board of Directors under the authority
contained in the Charter of the Corporation and Section 2-105(c) of the
Maryland General Corporation Law (the "MGCL"), and these Articles Supplementary
are filed pursuant to Section 2-208.1 of the MGCL.
The undersigned President acknowledges these Articles Supplementary to
be the corporate act of the Corporation and states that to the best of his
knowledge, information and belief, the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, AIM ADVISOR FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on September 29, 1997.
AIM ADVISOR FUNDS, INC.
Witness:
/s/ OFELIA M. MAYO /s/ ROBERT H. GRAHAM
- ------------------------------ ---------------------------------
Assistant Secretary President
7
<PAGE> 1
EXHIBIT 2(b)
AMENDED AND RESTATED BYLAWS
OF
AIM ADVISOR FUNDS, INC.,
A MARYLAND CORPORATION
ADOPTED EFFECTIVE SEPTEMBER 20, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 1. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Section 4. Notice of Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 5. Closing of Transfer Books, Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 6. Quorum, Adjournment of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
Section 7. Voting and Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
Section 8. Conduct of Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
Section 9. Validity of Proxies and Ballots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Section 10. Nominations and Stockholder Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
ARTICLE II
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
Section 1. Number and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
Section 2. Increase or Decrease in Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
Section 3. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 4. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 5. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 7. Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 8. Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 9. Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Section 10. Informal Action by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 11. Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 3. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 4. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 6. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Section 7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE IV
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 1. Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 3. Stock Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
Section 4. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
</TABLE>
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ARTICLE V
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
ARTICLE VI
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 1. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 2. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 3. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 4. Indemnification of Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 5. Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 6. Subsequent Changes to Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
ARTICLE VIII
AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
AIM ADVISOR FUNDS, INC.
A MARYLAND CORPORATION
ARTICLE I
STOCKHOLDERS
Section 1. Time and Place of Meetings. Meetings of the
stockholders of the Corporation need not be held except as required under the
general laws of the State of Maryland, as the same may be amended from time to
time. Meetings of the stockholders shall be held at places within the United
States designated by the Board of Directors and set forth in the notice of the
meeting.
Section 2. Annual Meetings. If a meeting of the stockholders
of the Corporation is required by the Investment Company Act of 1940, as
amended, to take action with respect to the election of directors, then such
matter shall be submitted to the stockholders at a special meeting called for
such purpose, which shall be deemed the annual meeting of stockholders for that
year. In years in which no such action by stockholders is so required, no
annual meeting of stockholders need be held.
Section 3. Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called by the Chairman of the
Board of Directors, if any, by the President or by a majority of the Board of
Directors. In addition, such special meetings shall be called by the Secretary
upon receipt of a request in writing, signed by stockholders entitled to cast
at least 10% of all the votes entitled to be cast at the meeting, which states
the purpose of the meeting and the matters proposed to be acted on at the
meeting. Unless requested by stockholders entitled to cast a majority of all
the votes entitled to be cast at the meeting, a special meeting need not be
called
-1-
<PAGE> 5
to consider any matter which is substantially the same as a matter voted on at
a special meeting of the stockholders held during the preceding twelve (12)
months.
Section 4. Notice of Meeting of Stockholders. Written or
printed notice of every meeting of stockholders, stating the time and place
thereof (and the purpose of any special meeting), shall be given, not less than
ten (10) days nor more than ninety (90) days before the date of the meeting, to
each stockholder entitled to vote at the meeting and each other stockholder
entitled to notice, by delivering such notice personally, or leaving such
notice at each stockholder's residence or usual place of business, or by
mailing such notice, postage prepaid, addressed to each stockholder at such
stockholder's address as it appears upon the books of the Corporation. Each
person who is entitled to notice of any meeting shall be deemed to have waived
notice if present at the meeting in person or by proxy or if such person signs
a waiver of notice (either before or after the meeting) which is filed with the
records of stockholders meetings.
Section 5. Closing of Transfer Books, Record Dates. The
Board of Directors may set a record date for the purpose of making any proper
determination with respect to stockholders, including determining which
stockholders are entitled to notice of and to vote at a meeting, receive a
dividend or be allotted other rights. The record date may not be prior to the
close of business on the day the record date is fixed and shall be not more
than 90 days before the date on which the action requiring the determination is
taken. In the case of a meeting of stockholders, the record date shall be at
least ten days before the date of the meeting. Only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting, or to
receive such dividends or rights, as the case may be.
Section 6. Quorum, Adjournment of Meeting. The presence in
person or by proxy of stockholders entitled to cast one-third of all votes
entitled to be cast at the meeting shall constitute a quorum at all meetings of
the stockholders, except with respect to any matter which by law or the charter
of the Corporation requires the separate approval of one or more classes or
series of the
-2-
<PAGE> 6
capital stock of the Corporation, in which case the holders of one-third of the
shares of each such class or series entitled to vote on the matter shall
constitute a quorum; and a majority, or with respect to the election of
Directors, a plurality, of all votes cast at a meeting (or cast by the holders
of shares of any such classes or series whose separate approval on a matter is
required) at which a quorum is present shall be sufficient to approve any
matter which properly comes before the meeting, unless otherwise provided by
applicable law, the Charter of the Corporation or these Bylaws. If at any
meeting of the stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, by a majority of all votes cast and
without further notice, adjourn the same from time to time (but not more than
120 days after the original record date for such meeting) until a quorum shall
attend, but no business shall be transacted at any such adjourned meeting
except business which might have been lawfully transacted had the meeting not
been adjourned.
Section 7. Voting and Inspectors. (a) At all meetings of
the stockholders, every stockholder of record entitled to vote thereat shall be
entitled to one vote for each share of stock standing in such stockholder's
name on the books of the Corporation (and such stockholders of record holding
fractional shares shall have proportionate voting rights as provided in the
Articles of Incorporation) on the date for the determination of stockholders
entitled to vote at such meeting either in person or by written proxy signed by
the stockholder or by his duly authorized attorney in fact. A stockholder 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
shall not be valid more than eleven months after its date.
(b) At any meeting of stockholders considering the
election of directors, the Board of Directors prior to the convening of such
meeting may, or, if the Board has not so acted, the Chairman of the meeting
may, appoint two (2) inspectors of election, who shall first subscribe an
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oath or affirmation to execute faithfully the duties of inspectors at such
election in strict impartiality and according to the best of their ability, and
shall after the election certify the result of the vote taken. No candidate
for election as a director shall be appointed to act as an inspector of
election.
(c) The Chairman of the meeting may cause a vote by
ballot to be taken with respect to any election or matter.
Section 8. Conduct of Stockholders Meetings. (a) The
meetings of the stockholders 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 elected for such purpose at
the meeting. The Secretary of the Corporation, if present, shall act as
Secretary of such meetings, or if the Secretary is not present, an Assistant
Secretary of the Corporation shall so act, and if no Assistant Secretary is
present, then a person designated by the Secretary of the Corporation 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 Directors of the Corporation shall
be entitled to make such rules and regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Directors, 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 stockholders of record of the corporation 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
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to be voted on by ballot, unless and to the extent the Board of Directors or
the chairman of the meeting determines that meetings of stockholders shall not
be required to be held in accordance with the rules of parliamentary procedure.
Section 9. Validity of Proxies and Ballots. At every meeting
of the stockholders, all proxies shall be received and maintained by, and all
ballots shall be received and canvassed by, the secretary of the meeting, who
shall decide all questions concerning the qualification of voters, the validity
of proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed, in which case the inspectors of election
shall decide all such questions.
Section 10. Nominations and Stockholder Business.
(a) Annual Meetings of Stockholders.
(1) Nominations of individuals for election
to the board of directors shall be made by the Board of Directors or a
nominating committee of the Board of Directors, if one has been established
(the "Nominating Committee"). Any stockholder of the Corporation may submit
names of individuals to be considered by the Nominating Committee or the Board
of Directors, as applicable, provided, however, (i) that such person was a
stockholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating Committee or the Board of
Directors, as applicable, shall make the final determination of persons to be
nominated.
(2) The business to be considered by the
stockholders at an annual meeting shall be determined by the Board of Directors
of the Corporation.
(b) Special Meetings of Stockholders. Only such
business shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the corporation's notice of
meeting.
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(c) General.
(1) Only such persons who are nominated in
accordance with the provisions of this Section 10 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the provisions of this Section 10. The presiding officer of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
provisions of this Section 10 and, if any proposed nomination or business is
not in compliance with this Section 10, to declare that such defective
nomination or proposal be disregarded.
(2) Notwithstanding the foregoing
provisions of this Section 10, a stockholder shall also comply with all
applicable requirements of state law and of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations thereunder
with respect to the matters set forth in this Section 10. Nothing in this
Section 10 shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and
affairs of the Corporation shall be managed under the direction of a Board of
Directors. The number of directors may be increased or decreased as herein
provided. Directors shall hold office until their respective successors have
been duly elected and qualify. Directors need not be stockholders.
Section 2. Increase or Decrease in Number of Directors. The
Board of Directors, by the vote of a majority of the entire Board, may increase
the number of directors to a number not exceeding fifteen (15), and may appoint
directors to fill the vacancies created by any increase in the
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number of directors, and such appointed directors shall hold office until their
successors have been duly elected and qualify. The Board of Directors, by the
vote of a majority of the entire Board, may decrease the number of directors to
a number not less than the minimum number required under the Maryland General
Corporation Law, but any such decrease shall not affect the term of office of
any director. Vacancies occurring other than by reason of any increase in the
number of directors shall be filled as provided by the Maryland General
Corporation Law.
Section 3. Place of Meetings. The directors may hold their
meetings and keep the books of the Corporation outside the State of Maryland,
at any office or offices of the Corporation, or at any other place as they may
from time to time determine; and in the case of meetings, as shall be specified
in the respective notices of such meetings.
Section 4. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such time and on such notice, if any, as the
directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board
of Directors may be held from time to time upon call of the Chairman of the
Board of Directors, if any, the President, or any two (2) or more of the
directors, by oral, telegraphic, telephonic or written notice duly given to
each director not less than one (1) business day before such meeting or, sent
or mailed to each director, not less than three (3) business days before such
meeting. Each director who is entitled to notice shall be deemed to have
waived notice if such director is present at the meeting or, either before or
after the meeting, such director signs a waiver of notice which is filed with
the minutes of the meeting. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 6. Quorum. One third (1/3) of the directors then in
office (but in no event less than two (2) directors) shall constitute a quorum
of the Board of Directors for the transaction of business. If at any meeting
of the Board there shall be less than a quorum present, a majority of those
directors present may adjourn the meeting from time to time until a quorum
shall have been
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attained. The action of a majority of the directors present at any meeting at
which there is a quorum shall be the action of the Board of Directors, except
as may be otherwise specifically provided by applicable law, the Charter or
these Bylaws.
Section 7. Telephonic Meetings. The members of the Board of
Directors, or any committee of the Board of Directors, may participate in a
meeting by means of a conference telephone call or similar communications
equipment if all persons participating in such meeting can simultaneously hear
each other, and participation in a meeting by these means constitutes presence
in person at such meeting.
Section 8. Executive Committee. The Board of Directors may
appoint an Executive Committee consisting of two (2) or more directors.
Between meetings of the Board of Directors, the Executive Committee, if any,
shall have and may exercise any or all of the powers of the Board of Directors
with respect to the management of the business and affairs of the Corporation,
except (a) as otherwise provided by law and (b) the power to increase or
decrease the size of, or fill vacancies on, the Board of Directors. The
Executive Committee may determine its own rules of procedure, and may meet when
and as the Executive Committee determines, or when directed by resolution of
the Board of Directors. The presence of a majority of the Executive Committee
shall constitute a quorum. The Board of Directors shall have the power at any
time to change the members and powers of, to fill vacancies on, and to dissolve
the Executive Committee. In the absence of any member of the Executive
Committee, the members present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of such absent member.
Section 9. Other Committees. The Board of Directors may
appoint other committees which shall in each case consist of such number of
directors (not less than two (2)), which shall have and may exercise such
powers as the Board may from time to time determine, subject to applicable law.
A majority of all members of any such committee may determine its action, and
the time and place of its meetings, unless the Board of Directors shall provide
otherwise. The Board
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of Directors shall have the power at any time to change the members and powers
of, to fill vacancies on, and to dissolve any such committee. In the absence
of any member of such committee, the members present at any meeting, whether or
not they constitute a quorum, may appoint a director to act in the place of
such absent member.
Section 10. Informal Action by Directors. Except to the
extent otherwise specifically prohibited by applicable law, any action required
or permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or such committee, and such
consent is filed with the minutes of proceedings of the Board or such
committee.
Section 11. Compensation of Directors. Directors shall be
entitled to receive such compensation from the Corporation for their services
as directors as the Board of Directors may from time to time determine.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The Board of Directors shall
elect the executive officers of the Corporation, which 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 Directors), a Secretary and a
Treasurer. The Chairman of the Board, if any, shall be selected from among the
directors. The Board of Directors may also in its discretion appoint Assistant
Vice Presidents, 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 Directors may fill any vacancy
which may occur in any office. Any two (2) offices, except 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 Corporation in
more than one (1) capacity,
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if such instrument is required by law or by these Bylaws to be executed,
acknowledged or verified by two (2) or more officers.
Section 2. Term of Office. Unless otherwise specifically
determined by the Board of Directors, the officers shall serve at the pleasure
of the Board of Directors. If the Board of Directors in its judgment finds
that the best interests of the Corporation will be served, the Board of
Directors may remove any officer of the Corporation at any time with or without
cause.
Section 3. President. The President shall be the chief
executive officer of the Corporation and, subject to the Board of Directors,
shall generally manage the business and affairs of the Corporation. 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
stockholders and the Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board,
if any, shall preside at all meetings of the stockholders and the Board of
Directors, 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
Directors, and shall undertake such other assignments as may be requested by
the President.
Section 5. Other Officers. 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 Directors 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 Directors 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 have custody of
the seal of the Corporation, and shall keep the minutes of the meetings of the
stockholders, Board of Directors and
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any committees thereof, and shall issue all notices of the Corporation. The
Secretary shall have charge of the stock 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 Directors. The
Secretary shall also keep or cause to be kept a stock book, which may be
maintained by means of computer systems, containing the names, alphabetically
arranged, of all persons who are stockholders of the Corporation, showing their
places of residence, the number and class or series of any class of shares of
stock held by them, respectively, and the dates when they became the record
owners thereof, and such book shall be open for inspection as prescribed by the
laws of the State of Maryland.
Section 7. Treasurer. The Treasurer shall have the care and
custody of the funds and securities of the Corporation and shall deposit the
same in the name of the Corporation in such bank or banks or other
depositories, subject to withdrawal in such manner as these Bylaws or the Board
of Directors may determine. The Treasurer shall, if required by the Board of
Directors, give such bond for the faithful discharge of duties in such form as
the Board of Directors may require.
ARTICLE IV
STOCK
Section 1. Stock Certificates. Each stockholder of the
Corporation shall be entitled to a certificate or certificates for the full
number of shares of each class or series of stock of the Corporation owned by
such stockholder, in such form as the Board of Directors may from time to time
determine, subject to applicable law.
Section 2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the holder(s) thereof,
in person or by such holder's duly authorized attorney or legal representative,
upon surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer,
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with such proof of the authenticity of the signature(s) as the Corporation or
its agents may reasonably require. In the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board of
Directors.
Section 3. Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them, respectively, shall be kept at the principal
offices of the Corporation, or if the Corporation has appointed a transfer
agent, at the offices of such transfer agent.
Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Directors may determine the conditions upon which a new stock certificate of
any class or series may be issued in place of a certificate which is alleged to
have been lost, stolen or destroyed. The Board of Directors may in its
discretion require the owner of such certificate to give bond, with sufficient
surety to the Corporation and the transfer agent, if any, to indemnify the
Corporation and such transfer agent against any and all losses or claims which
may arise by reason of the issuance of a replacement certificate.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide for a suitable corporate
seal, in such form and bearing such inscriptions as it may determine. In lieu
of fixing the Corporation's seal to a document, it is sufficient to meet the
requirements of any law, rule or regulation relating to a corporate seal to
place the word ("seal") adjacent to the signature of the person authorized to
sign the document on behalf of the Corporation.
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ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the
Board of Directors.
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
Section 1. Indemnification of Directors and Officers. The
Corporation shall indemnify its directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify its officers to the same extent as its
directors and to such further extent as is consistent with law. The
Corporation shall indemnify its directors and officers who while serving as
directors or officers also serve at the request of the Corporation as a
director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the fullest extent consistent with law. The indemnification
and other rights provided for by this Article shall continue as to a person who
has ceased to be a director or officer, and shall inure to the benefit of the
heirs, executors and administrators of such a person. This Article shall not
protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office ("disabling
conduct").
Section 2. Advances. The Corporation shall advance payment
to any current or former director or officer of the Corporation for reasonable
expenses incurred in connection with any proceeding in which the individual is
made a party by reason of service as a director or officer in the manner and to
the fullest extent permissible under the Maryland General Corporation Law.
Upon receipt by the Corporation of a written affirmation of his or her good
faith belief that the standard of
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conduct necessary for indemnification by the Corporation has been met and a
written undertaking to repay any such advance if it should ultimately be
determined that the requisite standard of conduct has not been met. In
addition, at least one of the following conditions must be satisfied: (a) the
individual shall provide security in form and amount acceptable to the
Corporation for the foregoing undertaking, (b) the Corporation shall be insured
against losses arising by reason of the advance, or (c) a majority of a quorum
of directors of the Corporation who are neither interested persons, as defined
in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor
parties to the proceeding ("disinterested non-party directors"), or independent
legal counsel in a written opinion, shall have determined, based on a review of
facts readily available to the Corporation at the time the advance is proposed
to be made, that there is reason to believe that the person seeking
indemnification will ultimately be found to meet the requisite standard of
conduct.
Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of disabling conduct, or (b)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the person to be indemnified was not liable by reason
of disabling conduct by, (i) the vote of a majority of a quorum of
disinterested non-party directors, or (ii) an independent legal counsel in a
written opinion.
Section 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the Corporation may
be indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by contract,
subject to any limitations imposed by the Investment Company Act of 1940, as
amended.
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Section 5. Other Rights. The Board of Directors may make
further provision consistent with law for indemnification and advancement of
expenses to directors, officers, employees and agents by resolution, agreement
or otherwise. The indemnification provided for by this Article shall not be
deemed exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be entitled under any
insurance, other agreement, resolution of stockholders or disinterested
directors, or otherwise.
Section 6. Subsequent Changes to Law. References in this
Article are to the Maryland General Corporation Law and to the Investment
Company Act of 1940 as from time to time amended. No amendment of these Bylaws
shall affect any right of any person under this Article based on any event,
omission or proceeding occurring prior to such amendment.
ARTICLE VIII
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended or repealed at any
meeting of the Board of Directors without prior notice that such alteration,
amendment or repeal will be considered at such meeting.
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EXHIBIT 5(b)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, as made the 4th day of August, 1997, by and between
A I M Advisors, Inc. (the "Advisor"), a Delaware corporation, and AIM Advisor
Funds, Inc., a Maryland corporation (the "Fund").
W I T N E S S E T H :
WHEREAS, the Fund is a corporation organized under the laws of the
State of Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a diversified, open-end
management investment company and is currently divided into seven series (the
"Shares"), and which may be divided into additional series, each representing
an interest in a separate portfolio of investments (such series as are
presently structured being designated as the AIM Advisor Large Cap Value Fund,
AIM Advisor Income Fund, AIM Advisor Flex Fund, AIM Advisor MultiFlex Fund, AIM
Advisor Real Estate Fund, AIM Advisor International Value Fund, and AIM Advisor
Cash Management Fund. Such series, together with any future series, are
hereinafter referred to as the "Series"); and
WHEREAS, the Fund desires that the Adviser manage its investment
operations and provide it with certain other services, and the Adviser desires
to manage said operations and to provide such other services;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Investment Management Services. The Adviser hereby agrees to manage the
investment operations of the Fund's Series, subject to the terms of this
Agreement and to the supervision of the Fund's directors (the "Directors"). The
Adviser agrees to perform, or arrange for the performance of, the following
specific services for the Fund:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"), and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund, and
to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analyses and research, the reviews of current economic conditions and of
trends, and the consideration of long-range
<PAGE> 2
investment policy now or hereafter generally available to investment
advisory customers of the Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the
Adviser is authorized to employ such brokers or dealers as may, in the
Adviser's best judgment, implement the policy of the Fund to obtain prompt and
reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Adviser is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Adviser effects securities transactions on behalf of
the Fund may be used by the Adviser in servicing all of its accounts, and not
all such services may be used by the Adviser in connection with the Fund. In
the selection of a broker or dealer for execution of any negotiated
transaction, the Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction; or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Adviser shall consider such "posted" commission rates, if any, together with
any other information available at the time as to the level of commissions
known to be charged on comparable transactions by other qualified brokerage
firms, as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance to the
Fund of speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable best
price and execution on a particular transaction, the Adviser may consider the
sale of Fund shares by a broker or dealer in selecting among qualified
broker-dealers.
2. Other Services and Facilities. The Adviser shall, in addition, supply at
its own expense all supervisory and administrative services and facilities
necessary in connection with the day-to-day operations of the Fund's Series
(except those associated with the preparation and maintenance of certain
required books and records and certain sub- accounting services, which services
and facilities are provided under separate Accounting Services, Transfer Agency
and Administrative Services Agreements between the Adviser and A I M Fund
Services, Inc., and those operational services which are necessary for the
day-to-day operations of the Fund's Series, which services are provided under a
separate Operating Services Agreement dated August 4, 1997, between the Fund
and the Adviser (the "Operating Services Agreement"). These services shall
include, but not be limited to: supplying the Fund with officers, clerical
staff and other employees, if any, who are necessary in connection with the
Fund's operations; furnishing office space, facilities, equipment, and
supplies; conducting periodic compliance reviews of the Fund's operations;
preparation and review of certain required documents, reports and filings
(including required reports to the Securities
2
<PAGE> 3
and Exchange Commission (the "SEC"), and other corporate documents of the
Fund), except insofar as the assistance of independent accountants or attorneys
is necessary or desirable; supplying basic telephone service and other
utilities; and preparing and maintaining the books and records required to be
prepared and maintained by the Fund pursuant to Rule 31a-1(b)(4), (5), (9), and
(10) under the Investment Company Act. All books and records prepared and
maintained by the Adviser for the Fund under this Agreement shall be the
property of the Fund and, upon request therefor, the Adviser shall surrender to
the Fund such of the books and records so requested.
3. Payment of Costs and Expenses. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies reasonably
necessary to provide the services required to be provided by the Adviser under
this Agreement. The Adviser shall pay all of the costs and expenses associated
with the Fund's operations and activities, except those expressly assumed by
the Fund under this Agreement, which shall consist of:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund in connection with securities transactions to which
the Fund is a party or in connection with securities owned by the Fund's
Series;
(b) the interest on indebtedness, if any, incurred by the Fund;
(c) extraordinary expenses, including unexpected franchise or income
taxes, or business license and other corporate fees (not including SEC and
state securities registration fees) that are not anticipated which the Fund
will be required to pay to federal, state, county, city, or other
governmental agents, and fees and disbursements of Fund counsel in
connection with litigation by or against the Fund;
(d) the expenses of distributing shares of the Fund but only if and to the
extent permissible under a plan of distribution adopted by the Fund pursuant
to Rule 12b-1 under the Investment Company Act; and
(e) all fees paid by the Fund for operational services which are necessary
for the day-to-day operations of the Fund's Series under the Operating
Services Agreement.
4. Use of Affiliated Companies. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement, the
Adviser may, to the extent it deems appropriate and subject to compliance with
the requirements of applicable laws and regulations, and upon receipt of
written approval of the Fund, make use of its affiliated companies and their
employees; provided that the Adviser shall supervise and remain fully
responsible for all such services in accordance with and to the extent provided
by this Agreement, and further provided that all costs and expenses associated
with the providing of services by any such companies or employees and required
by this Agreement to be borne by the Adviser shall be borne by the Adviser or
its affiliated companies.
5. Compensation of the Adviser. For the services to be rendered and the
charges and expenses to be assumed by the Adviser hereunder, the Fund shall pay
to the Adviser an advisory fee which will be computed daily and paid as of the
last day of each month, using for each daily calculation the most recently
determined net asset value of each of the Fund's Series, as determined by
valuations made in accordance with the Fund's procedures for calculating its
net asset value as described in the Fund's Prospectus and/or Statement of
Additional Information. The advisory fee to the Adviser shall be computed at
the annual rates indicated in Schedule A hereto. During any
3
<PAGE> 4
period when the determination of the Fund's net asset value is suspended by the
Directors of the Fund, the net asset value of a share of the Fund as of the
last business day prior to such suspension shall, for the purpose of this
Paragraph 5, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined.
No advisory fee shall be paid to the Adviser with respect to any
assets of the Fund's Series which may be invested in any other investment
company for which the Adviser serves as investment adviser or sub-adviser. The
fee provided for hereunder shall be prorated in any month in which this
Agreement is not in effect for the entire month. If, in any given year, the sum
of a Series' expenses exceeds the state-imposed annual expense limitation, if
any to which the Fund is subject, the Adviser will be required to reimburse
that Series for such excess expenses promptly. Interest, taxes and
extraordinary items such as litigation costs are not deemed expenses for
purposes of this paragraph and shall be borne by that Series in any event.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are
accounted for as capital items and shall not be deemed to be expenses for
purposes of this paragraph.
6. Avoidance of Inconsistent Positions and Compliance with Laws. In connection
with purchases or sales of securities for the investment portfolios of the
Fund's Series, neither the Adviser nor its officers or employees will either
act as a principal or agent for any party other than the Fund's Series or
receive any commissions. The Adviser will comply with all applicable laws in
acting hereunder including, without limitation, the Investment Company Act; the
Investment Advisers Act of 1940, as amended; and all rules and regulations duly
promulgated under the foregoing.
7. Duration and Termination. With respect to each of the Fund's Series, this
Agreement is subject to approval by a majority of the outstanding voting
securities of that Series, and shall become effective as of the date so written
above with respect to each Series for which such approval has been obtained,
and unless sooner terminated as hereinafter provided, shall remain in force
with respect to each such Series for an initial term ending two years from the
date of execution, and from year to year thereafter, but only as long as such
continuance is specifically approved at least annually (i) by a vote of a
majority of the outstanding voting securities of such Series or by the
Directors of the Fund, and (ii) by a majority of the Directors of the Fund who
are not interested persons of the Adviser or the Fund by votes cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated as
to the Fund or as to any one or more of the Series without the payment of any
penalty, by the Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund's Series, as the case may be, or by
the Adviser. This Agreement shall immediately terminate in the event of its
assignment, unless an order is issued by the SEC conditionally or
unconditionally exempting such assignment from the provisions of Section 15(a)
of the Investment Company Act, in which event this Agreement shall remain in
full force and effect subject to the terms and provisions of said order. In
interpreting the provisions of this paragraph 7, the definitions contained in
Section 2(a) of the Investment Company Act and the applicable rules under the
Investment Company Act (particularly the definitions of "interested person,"
"assignment" and "vote of a majority of the outstanding voting securities")
shall be applied.
The Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
4
<PAGE> 5
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation described
in paragraph 5 earned prior to such termination.
8. Non-Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to others,
including, without limitation, other investment companies with similar
objectives to those of the Fund's Series. The Adviser may, when it deems such
to be advisable, aggregate orders for its other customers together with any
securities of the same type to be sold or purchased for the Fund's Series in
order to obtain best execution and lower brokerage commissions. In such event,
the Adviser shall allocate the shares so purchased or sold, as well as the
expenses incurred in the transaction, in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the Fund's Series
and the Adviser's other customers. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested in the
Adviser and its affiliates, as directors, officers, employees and shareholders
or otherwise and that directors, officers, employees and shareholders of the
Adviser, and its affiliates are or may become interested in the Fund as
directors, officers and employees.
9. Miscellaneous Provisions.
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Amendments Hereof. No provision of this Agreement may be orally
changed or discharged, but may only be modified by an instrument in writing
signed by the Fund and the Adviser. In addition, no amendment to this Agreement
shall be effective unless approved by (1) the vote of a majority of the
Directors of the Fund, including a majority of the Directors who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and (2)
the vote of a majority of the outstanding voting securities of any of the
Fund's Series as to which such amendment is applicable (other than an amendment
which can be effective without shareholder approval under applicable law).
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Texas. To the extent that the applicable laws of the
State of Texas, or any of the provisions herein, conflict with applicable
provisions of the Investment Company Act, the latter shall control.
10. License Agreement. The Fund 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 Fund with
respect to such series of shares.
5
<PAGE> 6
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, on the date first above written.
AIM ADVISOR FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ------------------------------
Assistant Secretary
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------
President
ATTEST:
/s/ STEPHEN I. WINER
- ------------------------------
Assistant Secretary
6
<PAGE> 7
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
OF AIM ADVISOR FUNDS, INC.
Pursuant to Clause 5 of the Investment Advisory Agreement, fees
payable thereunder to the Adviser shall be calculated by applying the following
annual rates to the average daily net assets of each Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Large Cap Value Fund 0.75%
AIM Advisor Flex Fund 0.75%
AIM Advisor Real Estate Fund 0.90%
AIM Advisor MultiFlex Fund 1.00%
AIM Advisor International Value Fund 1.00%
AIM Advisor Income Fund 0.65%
AIM Advisor Cash Management Fund 0.50%
</TABLE>
7
<PAGE> 1
EXHIBIT 5(d)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 4th day of August, 1997, by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Capital Management,
Inc., a Delaware corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund"), is engaged in business
as a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with
the Fund (the "AIM Investment Advisory Agreement"), pursuant to which AIM is
required to provide investment and advisory services to the Fund's series, and,
upon receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to three of the Fund's seven series (the AIM Advisor Large Cap Value
Fund, the AIM Advisor Income Fund, and the AIM Advisor Flex Fund series,
hereinafter referred to as the "Series"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below, subject
to the broad supervision of AIM and the Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at
its own expense, to render such services and to assume the obligations herein
set forth for the compensation provided for herein. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund. The Sub-Adviser hereby agrees to manage the investment operations of the
Fund's Series, subject to the supervision of the Fund's directors (the
"Directors") and AIM. Specifically, the Sub-Adviser agrees to perform the
following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
<PAGE> 2
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any Prospectus and/or Statement of Additional Information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the
Sub-Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the
Sub-Adviser is authorized to employ such brokers or dealers as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain prompt
and reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on behalf
of the Fund may be used by the Sub-Adviser in servicing all of its accounts,
and not all such services may be used by the Sub-Adviser in connection with the
Fund. In the selection of a broker or dealer for execution of any negotiated
transaction, the Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction, or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Sub-Adviser shall consider such "posted" commission rates, if any, together
with any other information available at the time as to the level of commissions
known to be charged on comparable transactions by other qualified brokerage
firms, as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance to the
Fund of speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified broker-dealers who recommend the Fund to
their clients, or who act as agent in the purchase of the Fund's shares for
their clients. When a number of brokers and dealers can provide comparable best
price and execution on a particular transaction, the Sub-Adviser may consider
the sale of Fund shares by a broker or dealer in selecting among qualified
broker-dealers.
2
<PAGE> 3
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the extent
expressly assumed by the Sub-Adviser herein and except to the extent required
by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay all costs
and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses
assumed by the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Fund's Series,
as determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rates indicated in Schedule A hereto. During any
period when the determination of the Series' net asset value is suspended by
the Directors of the Fund, the net asset value of a share of the Fund's Series
as of the last business day prior to such suspension shall, for the purpose of
this Article III, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub-Adviser with respect to any assets of the Fund's
Series which may be invested in any other investment company for which the
Sub-Adviser serves as investment adviser or sub adviser. The fee provided for
hereunder shall be prorated in any month in which this Agreement is not in
effect for the entire month. The Sub-Adviser shall be entitled to receive fees
hereunder only for such periods as the AIM Investment Advisory Agreement
remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to
be exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, AIM and their affiliates are or may become
interested in the Fund as directors, officers and employees.
3
<PAGE> 4
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The
Sub-Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
With respect to each Series, this Agreement is subject to approval by
a majority of the outstanding voting securities of that Series, and shall
become effective as of the date so written above with respect to each Series
for which approval has been obtained, and shall remain in force for an initial
term of two years from the date of execution, and from year to year thereafter
until its termination in accordance with this Article VI, but only so long as
such continuance is specifically approved at least annually by (i) the
Directors of the Fund, or by the vote of a majority of the outstanding voting
securities of the Fund's Series, and (ii) a majority of those Directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated as to any services at any time,
without the payment of any penalty, by AIM, by the Fund by vote of the
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund's Series, or by the Sub-Adviser. A termination by AIM or
the Sub-Adviser shall require sixty days' written notice to the other party and
to the Fund, and a termination by the Fund shall require such notice to each of
the parties. This Agreement shall automatically terminate in the event of its
assignment to the extent required by the Investment Company Act and the rules
thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged,
but may only be modified by an instrument in writing signed by the Sub-Adviser
and AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such
4
<PAGE> 5
amendment, and (2) the vote of a majority of the outstanding voting securities
of any of the Fund's Series as to which such amendment is applicable (other
than an amendment which can be effective without shareholder approval under
applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Texas and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
-----------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ------------------------------------
Assistant Secretary
INVESCO CAPITAL MANAGEMENT, INC.
By: ILLEGIBLE
-----------------------------
President
ATTEST:
ILLEGIBLE
- ------------------------------------
Assistant Secretary ICM
Director of Compliance
6
<PAGE> 7
SCHEDULE A
TO
ICM SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Capital Management, Inc. ("ICM"), fees payable
thereunder to ICM shall be calculated by applying the following annual rates to
the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Large Cap Value Fund 0.20%
AIM Advisor Flex Fund 0.20%
AIM Advisor Income Fund 0.10%
</TABLE>
7
<PAGE> 1
EXHIBIT 5(f)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 4th day of August, 1997, by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Management &
Research, Inc., a Massachusetts corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO ADVISOR FUNDS, INC. (the "Fund") is engaged in
business as a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to
as the "Investment Company Act") which is divided into various series (the
"Shares"), and which may be divided into additional series, each representing
an interest in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with
the Fund (the "AIM Investment Advisory Agreement"), pursuant to which AIM is
required to provide investment and advisory services to the Fund's series, and,
upon receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to one of the Fund's series (the AIM Advisor MultiFlex Fund,
hereinafter referred to as the "Series") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, AIM and the Sub- Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below, subject
to the broad supervision of AIM and the Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at
its own expense, to render such services and to assume the obligations herein
set forth for the compensation provided for herein. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
The Sub-Adviser hereby agrees to manage the investment operations of
the Fund's Series, subject to the supervision of the Fund's directors (the
"Directors") and AIM. Specifically, the Sub-Adviser agrees to perform the
following services:
<PAGE> 2
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Series, and to execute all purchases and
sales of portfolios securities;
(b) to maintain a continuous investment program for the Fund's Series,
consistent with (i) the Series' investment policies as set forth in the
Fund's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, and in
any prospectus and/or statement of additional information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Fund's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Series, unless otherwise directed by the Directors of the Fund or
AIM, and to execute transactions accordingly;
(d) to provide to the Fund's Series the benefit of all of the investment
analysis and research, the reviews of current economic conditions and of
trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the
Sub-Adviser;
(e) to determine what portion of the Fund's Series should be invested in
the various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Fund's Series, the
Sub-Adviser is authorized to employ such brokers or dealers as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain prompt
and reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on behalf
of the Fund may be used by the Sub-Adviser in servicing all of its accounts,
and not all such services may be used by the Sub-Adviser in connection with the
Fund. In the selection of a broker or dealer for execution of any negotiated
transaction, the Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction, or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Sub-Adviser shall consider such "posted" commission rates, if any, together
with any other information available at the time as to the level of commissions
known to be charged on comparable transactions by other qualified brokerage
firms, as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance to the
Fund of speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Fund transactions
may be effected through qualified
2
<PAGE> 3
broker-dealers who recommend the Fund to their clients, or who act as agent in
the purchase of the Fund's shares for their clients. When a number of brokers
and dealers can provide comparable best price and execution on a particular
transaction, the Fund's adviser may consider the sale of Fund shares by a
broker or dealer in selecting among qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the extent
expressly assumed by the Sub-Adviser herein and except to the extent required
by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay all costs
and expenses in connection with the operations of the Fund's Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses
assumed by the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Fund's Series,
as determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rate indicated in Schedule A hereto. During any
period when the determination of the Series' net asset value is suspended by
the Directors of the Fund, the net asset value of a share of the Fund's Series
as of the last business day prior to such suspension shall, for the purpose of
this Article III, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub-Adviser with respect to any assets of the Fund's
Series which may be invested in any other investment company for which the
Sub-Adviser serves as investment adviser or sub adviser. The fee provided for
hereunder shall be prorated in any month in which this Agreement is not in
effect for the entire month. The Sub-Adviser shall be entitled to receive fees
hereunder only for such periods as the AIM Investment Advisory Agreement
remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to
be exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, AIM and their affiliates are or may become
interested in the Fund as directors, officers and employees.
3
<PAGE> 4
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS
AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund's Series, neither the Sub-Adviser nor any of its
directors, officers or employees will either act as a principal or agent for
any party other than the Fund's Series or receive any commissions. The
Sub-Adviser will comply with all applicable laws in acting hereunder including,
without limitation, the Investment Company Act; the Investment Advisers Act of
1940, as amended; and all rules and regulations duly promulgated under the
foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding
voting securities of the Series, shall become effective as of the date so
written above, and shall remain in force for an initial term of two years from
the date of execution, and from year to year thereafter until its termination
in accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or by
the vote of a majority of the outstanding voting securities of the Fund's
Series, and (ii) a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by AIM, the Fund by vote of the Directors of the Fund, or by vote
of a majority of the outstanding voting securities of the Fund's Series, or by
the Sub-Adviser. A termination by AIM or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Fund, and a termination by
the Fund shall require such notice to each of the parties. This Agreement shall
automatically terminate in the event of its assignment to the extent required
by the Investment Company Act and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged,
but may only be modified by an instrument in writing signed by the Sub-Adviser
and AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such
4
<PAGE> 5
amendment and (2) the vote of a majority of the outstanding voting securities
of any of the Fund's Series as to which such amendment is applicable (other
than an amendment which can be effective without shareholder approval under
applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Texas and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
--------------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ------------------------------
Assistant Secretary
INVESCO MANAGEMENT &
RESEARCH, INC.
By: ILLEGIBLE
--------------------------------
Senior Vice President
ATTEST:
/s/ KATHLEEN A. GREENBERG
- ------------------------------
Assistant Secretary
6
<PAGE> 7
SCHEDULE A
TO
IMR SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Management & Research, Inc. ("IMR"), fees payable
thereunder to the IMR shall be calculated by applying the following annual
rates to the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor MultiFlex Fund 0.35% of assets to $500 million;
0.25% of assets in excess of $500 million
</TABLE>
7
<PAGE> 1
EXHIBIT 5(h)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 4th day of August, 1997, by and between A I M
Advisors, Inc. ("AIM"), a Delaware corporation, and INVESCO Realty Advisors,
Inc., a Texas corporation (the "Sub-Adviser").
W I T N E S S E T H:
WHEREAS, AIM Advisor Funds, Inc. (the "Fund") is engaged in business
as a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") which is divided into various series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments; and
WHEREAS, AIM and the Sub-Adviser are engaged principally in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, AIM has entered into an Investment Advisory Agreement with
the Fund (the "AIM Investment Advisory Agreement"), pursuant to which AIM is
required to provide investment and advisory services to the Fund's series, and,
upon receipt of written approval of the Fund, is authorized to retain companies
which are affiliated with AIM to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to one of the Fund series, (the AIM Advisor Real Estate Fund,
hereinafter referred to as the "Series") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, AIM and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
AIM hereby employs the Sub-Adviser to act as investment adviser to the
Series and to furnish the investment advisory services described below, subject
to the broad supervision of AIM and the Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at
its own expense, to render such services and to assume the obligations herein
set forth for the compensation provided for herein. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
The Sub-Adviser hereby agrees to manage the investment operations of
the Series, subject to the supervision of the Fund's directors (the
"Directors") and AIM. Specifically, the Sub-Adviser agrees to perform the
following services:
<PAGE> 2
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Series, and to execute all purchases and sales of
portfolios securities;
(b) to maintain a continuous investment program for the Series, consistent
with (i) the Series' investment policies as set forth in the Fund's Articles
of Incorporation, Bylaws, and Registration Statement, as from time to time
amended, under the Investment Company Act of 1940, and in any Prospectus
and/or Statement of Additional Information of the Fund, as from time to time
amended and in use under the Securities Act of 1933, as amended, and (ii)
the Fund's status as a regulated investment company under the Internal
Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Series, unless otherwise directed by the Directors of the Fund or AIM, and
to execute transactions accordingly;
(d) to provide to the Series the benefit of all of the investment analysis
and research, the reviews of current economic conditions and of trends, and
the consideration of long-range investment policy now or hereafter generally
available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Series should be invested in the
various types of securities authorized for purchase by the Series; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Series' securities shall be exercised.
With respect to execution of transactions for the Series, the
Sub-Adviser is authorized to employ such brokers or dealers as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain prompt
and reliable execution at the most favorable price obtainable. In assigning an
execution or negotiating the commission to be paid therefor, the Sub-Adviser is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including but not limited to research and analytical
capabilities, reliability of performance, sale of Fund shares, and financial
soundness and responsibility. Research services prepared and furnished by
brokers through which the Sub-Adviser effects securities transactions on behalf
of the Series may be used by the Sub-Adviser in servicing all of its accounts,
and not all such services may be used by the Sub-Adviser in connection with the
Fund. In the selection of a broker or dealer for execution of any negotiated
transaction, the Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated commission rate for such
transaction, or to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however, that the
Sub-Adviser shall consider such "posted" commission rates, if any, together
with any other information available at the time as to the level of commissions
known to be charged on comparable transactions by other qualified brokerage
firms, as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance to the
Fund of speed, efficiency, and confidentiality of execution, the execution
capabilities required by the circumstances of the particular transactions, and
the apparent knowledge or familiarity with sources from or to whom such
securities may be purchased or sold. Where the commission rate reflects
services, reliability and other relevant factors in addition to the cost of
execution, the Sub-Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Fund. Transactions may
be effected through qualified broker-dealers who recommend the Fund to their
clients, or who act as agent in the purchase of the
2
<PAGE> 3
Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Sub-Adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker-dealers.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the extent
expressly assumed by the Sub-Adviser herein and except to the extent required
by law to be paid by the Sub-Adviser, AIM and/or the Fund shall pay all costs
and expenses in connection with the operations of the Series.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the facilities furnished and expenses
assumed by the Sub-Adviser, AIM shall pay to the Sub-Adviser a fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Series, as
determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rate indicated in Schedule A hereto. During any
period when the determination of the Series' net asset value is suspended by
the Directors of the Fund, the net asset value of a share of the Series as of
the last business day prior to such suspension shall, for the purpose of this
Article III, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. However, no such fee
shall be paid to the Sub-Adviser with respect to any assets of the Series which
may be invested in any other investment company for which the Sub-Adviser
serves as investment adviser or sub-adviser. The fee provided for hereunder
shall be prorated in any month in which this Agreement is not in effect for the
entire month. The Sub-Adviser shall be entitled to receive fees hereunder only
for such periods as the AIM Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Series are not to be deemed to
be exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, AIM and their affiliates are or may become
interested in the Fund as directors, officers and employees.
3
<PAGE> 4
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS
AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Series, neither the Sub-Adviser nor any of its directors,
officers or employees will either act as a principal or agent for any party
other than the Series or receive any commissions. The Sub-Adviser will comply
with all applicable laws in acting hereunder including, without limitation, the
Investment Company Act; the Investment Advisers Act of 1940, as amended; and
all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement having been approved by a majority of the outstanding
voting securities of the Series, shall become effective as of the date so
written above, and shall remain in force for an initial term of two years from
the date of execution, and from year to year thereafter until its termination
in accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Fund, or by
the vote of a majority of the outstanding voting securities of the Series, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated as to any services at any time,
without the payment of any penalty, by AIM, by the Fund by vote of the
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Series, or by the Sub-Adviser. A termination by AIM or the
Sub-Adviser shall require sixty days' written notice to the other party and to
the Fund, and a termination by the Fund shall require such notice to each of
the parties. This Agreement shall automatically terminate in the event of its
assignment to the extent required by the Investment Company Act and the rules
thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged,
but may only be modified by an instrument in writing signed by the Sub-Adviser
and AIM. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Fund, including
a majority of the Directors who are not parties to this Agreement or interested
4
<PAGE> 5
persons of any such party, cast in person at a meeting called for the purpose
of voting on such amendment, and (2) the vote of a majority of the outstanding
voting securities of the Series (other than an amendment which can be effective
without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Texas and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of Texas, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
--------------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ------------------------------
Assistant Secretary
INVESCO REALTY ADVISORS, INC.
By: ILLEGIBLE
--------------------------------
Executive Vice President
ATTEST:
/s/ SHELLIE M. SIMS
- ------------------------------
Vice President and Secretary
6
<PAGE> 7
SCHEDULE A
TO
IRA SUB-ADVISORY AGREEMENT
Pursuant to Article III of the Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Realty Advisors, Inc. ("IRA"), fees payable
thereunder to the IRA shall be calculated by applying the following annual
rates to the average daily net assets of the indicated Series:
<TABLE>
<CAPTION>
SERIES ANNUAL FEE RATE
------ ---------------
<S> <C>
AIM Advisor Real Estate Fund 0.35% of assets to $100 million;
0.25% of assets in excess of $100 million.
</TABLE>
7
<PAGE> 1
EXHIBIT 6(b)
DISTRIBUTION AGREEMENT
THIS AGREEMENT made this 4th day of August, 1997, by and between AIM
Advisor Funds, Inc. (formerly, INVESCO Advisor Funds, Inc.), a Maryland
corporation (the "Fund"), and A I M Distributors, Inc., a Delaware corporation
(the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a diversified, open-end
management investment company whose authorized common shares ("Shares") are
divided into series AIM Advisor Large Cap Value Fund, AIM Advisor Income Fund,
AIM Advisor Flex Fund, AIM Advisor MultiFlex Fund, AIM Advisor Real Estate
Fund, AIM Advisor International Value Fund, and AIM Advisor Cash Management
Fund each of which series offers two classes of Shares and which may be divided
into additional series, each representing an interest in a separate portfolio
of investments, and additional classes of such series, and it is in the
interest of the Fund to offer the Shares for sale continuously; and
WHEREAS, the Underwriter is engaged in the business of selling shares
of investment companies either directly to investors or through other
securities dealers; and
WHEREAS, the Fund and the Underwriter wish to enter into an agreement
with each other with respect to the continuous offering of the Shares in order
to promote growth of the Fund and facilitate the distribution of the Shares;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the
distribution of Shares in jurisdictions wherein such Shares
may legally be offered for sale; provided, however, that the
Fund in its absolute discretion may (a) issue or sell Shares
directly to purchasers, or (b) issue or sell Shares to the
shareholders of any other investment company, for which the
Underwriter or any affiliate thereof shall act as exclusive
distributor, who wish to exchange all or a portion of their
investment in Shares or in shares of such other investment
company for the Shares. Notwithstanding any other provision
hereof, the Fund may terminate, suspend or withdraw the
offering of Shares or of one or more series or class(es) of
Shares whenever, in its sole discretion, it deems such action
to be desirable. The Fund reserves the right to reject any
subscription in whole or in part for any reason.
2. The Underwriter hereby agrees to serve as agent for the
distribution of the Shares and agrees that it will use its
best efforts with reasonable promptness to sell such part of
the authorized Shares remaining unissued as from time to time
shall be effectively registered under the Securities Act of
1933, as amended (the "1933 Act"), at such prices and on such
terms as hereinafter set forth, all subject to applicable
federal and state securities laws and regulations. Nothing
herein shall be construed to prohibit the Underwriter from
engaging in other related or unrelated businesses.
<PAGE> 2
3. In addition to serving as the Fund's agent in the distribution
of the Shares, the Underwriter shall also provide to the
holders of the Shares certain maintenance, support or similar
services ("Shareholder Services"). Such services shall
include, without limitation, answering routine shareholder
inquiries regarding the Fund, assisting shareholders in
considering whether to change dividend options and helping to
effectuate such changes, arranging for bank wires, and
providing such other services as the Fund may reasonably
request from time to time. It is expressly understood that
the Underwriter or the Fund may enter into one or more
agreements with third parties pursuant to which such third
parties may provide the Shareholder Services provided for in
this paragraph. Nothing herein shall be construed to impose
upon the Underwriter any duty or expense in connection with
the services of any registrar, transfer agent or custodian
appointed by the Fund, the computation of the net asset value
or offering price of Shares, the preparation and distribution
of notices of meetings, proxy soliciting material, annual and
periodic reports, dividends and dividend notices, or any other
responsibility of the Fund.
4. Except as otherwise specifically provided for in this
Agreement, the Underwriter shall sell the Shares directly to
purchasers, or through qualified broker-dealers or others, in
such manner, not inconsistent with the provisions hereof and
the then-effective Registration Statement of the Fund under
the 1933 Act (the "Registration Statement") and related
Prospectus (the "Prospectus") and Statement of Additional
Information ("SAI") of the Fund as the Underwriter may
determine from time to time; provided that no broker-dealer or
other person shall be appointed or authorized to act as agent
of the Fund without the prior consent of the directors (the
"Directors") of the Fund. The Underwriter will require each
broker-dealer to conform to the provisions hereof and of the
Registration Statement (and related Prospectus and SAI) at the
time in effect under the 1933 Act with respect to the public
offering price of the Shares. The Fund will have no
obligation to pay any commissions or other remuneration to
such broker-dealers.
5. The Shares offered for sale or sold by the Underwriter shall
be offered or sold at the net asset value per share, with or
without a sales charge, determined in accordance with the
then-current Prospectus and/or SAI relating to the sale of the
Shares except as departure from such prices shall be permitted
by the then-current Prospectus and/or SAI of the Fund, in
accordance with applicable rules and regulations of the
Securities and Exchange Commission. The price the Fund shall
receive for the Shares purchased from the Fund shall be the
net asset value per share of such Shares, determined in
accordance with the Prospectus and/or SAI applicable to the
sale of the Shares.
6. Except as may otherwise be agreed to by the Fund, the
Underwriter shall be responsible for issuing and delivering
such confirmations of sales made by it pursuant to this
Agreement as may be required; provided, however, that the
Underwriter or the Fund may utilize the services of other
persons or entities believed by it to be competent to perform
such functions. Shares shall be registered on the transfer
books of the Fund in such names and denominations as the
Underwriter may specify.
2
<PAGE> 3
7. The Fund will execute any and all documents and furnish any
and all information which may be reasonably necessary in
connection with the qualification of the Shares for sale
(including the qualification of the Fund as a broker-dealer
where necessary or advisable) in such states as the
Underwriter may reasonably request (it being understood that
the Fund shall not be required without its consent to comply
with any requirement which in the opinion of the Directors of
the Fund is unduly burdensome). The Underwriter, at its own
expense, will effect all qualifications of itself as broker or
dealer, or otherwise, under all applicable state or Federal
laws required in order that the Shares may be sold in such
states or jurisdictions as the Fund may reasonably request.
8. The Fund shall prepare and furnish to the Underwriter from
time to time the most recent form(s) of the Prospectus(es) and
SAI(s) of the Fund. The Fund authorizes the Underwriter to
use the Prospectus(es) and SAI(s), in the forms furnished to
the Underwriter from time to time, in connection with the sale
of the Shares of the Fund. The Fund will furnish to the
Underwriter from time to time such information with respect to
the Fund and the Shares as the Underwriter may reasonably
request for use in connection with the sale of the Shares.
The Underwriter agrees that it will not use or distribute or
authorize the use, distribution or dissemination by
broker-dealers or others in connection with the sale of the
Shares any statements, other than those contained in a current
applicable Prospectus and SAI of the Fund, except such
supplemental literature or advertising as shall be lawful
under federal and state securities laws and regulations, and
that it will promptly furnish the Fund with copies of all such
material.
9. The Underwriter will not make, or authorize any broker-dealers
or others to make, any short sales of the Shares of the Fund
or otherwise make any sales of the Shares unless such sales
are made in accordance with a then-current Prospectus and SAI
relating to the sale of the applicable Shares.
10. The Underwriter, as agent of and for the account of the Fund,
may cause the redemption or repurchase of the Shares at such
prices and upon such terms and conditions as shall be
specified in a then-current applicable Prospectus and SAI. In
selling, redeeming or repurchasing the Shares for the account
of the Fund, the Underwriter will in all respects conform to
the requirements of all state and federal laws and the Rules
of Fair Practice of the National Association of Securities
Dealers, Inc., relating to such sale, redemption or
repurchase, as the case may be. The Underwriter will observe
and be bound by all the provisions of the Articles of
Incorporation or Bylaws of the Fund and of any provisions in
the Registration Statement, Prospectus(es) and SAI(s), as such
may be amended or supplemented from time to time, notice of
which shall have been given to the Underwriter, which at the
time in any way require, limit, restrict, prohibit or
otherwise regulate any action on the part of the Underwriter.
11. (a) The Fund shall indemnify, defend and hold harmless
the Underwriter, its officers and directors and any
person who controls the Underwriter within the
meaning of the 1933 Act, from and against any and all
claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims,
demands or liabilities and any attorney fees incurred
in
3
<PAGE> 4
connection therewith) which the Underwriter, its
officers and directors or any such controlling
person, may incur under the federal securities laws,
the common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact
contained in the Registration Statement or any
related Prospectus and/or SAI or arising out of or
based upon any alleged omission to state a material
fact required to be stated therein or necessary to
make the statements therein not misleading.
Notwithstanding the foregoing, this indemnity
agreement, to the extent that it might require
indemnity of the Underwriter or any person who is an
officer, director or controlling person of the
Underwriter, shall not inure to the benefit of the
Underwriter or officer, director or controlling
person thereof unless a court of competent
jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result
would not be against public policy as expressed in
the federal securities laws and in no event shall
anything contained herein be so construed as to
protect the Underwriter against any liability to the
Fund, the Directors or the Fund's shareholders to
which the Underwriter 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.
This indemnity agreement is expressly conditioned
upon the Fund's being notified of any action brought
against the Underwriter, its officers or directors or
any such controlling person, which notification shall
be given by letter or by telegram addressed to the
Fund at its principal address in Houston, Texas and
sent to the Fund by the person against whom such
action is brought within ten (10) days after the
summons or other first legal process shall have been
served upon the Underwriter, its officers or
directors or any such controlling person. The
failure to notify the Fund of any such action shall
not relieve the Fund from any liability which it may
have to the person against whom such action is
brought by reason of any such alleged untrue
statement or omission otherwise than on account of
the indemnity agreement contained in this paragraph.
The Fund shall be entitled to assume the defense of
any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be
conducted by counsel chosen by the Fund and approved
by the Underwriter, which approval shall not be
unreasonably withheld. If the Fund elects to assume
the defense of any such suit and retain counsel
approved by the Underwriter, the defendant or
defendants in such suit shall bear the fees and
expenses of an additional counsel obtained by any of
them. Should the Fund elect not to assume the
defense of any such suit, or should the Underwriter
not approve of counsel chosen by the Fund, the Fund
will reimburse the Underwriter, its officers and
directors or the controlling person or persons named
as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by the
Underwriter or them. In addition, the Underwriter
shall have the right to employ counsel to represent
it, its officers and directors and any such
controlling person who may be
4
<PAGE> 5
subject to liability arising out of any claim in
respect of which indemnity may be sought by the
Underwriter against the Fund hereunder if in the
reasonable judgment of the Underwriter it is
advisable for the Underwriter, its officers and
directors or such controlling person to be
represented by separate counsel, in which event the
fees and expenses of such separate counsel shall be
borne by the Fund. This indemnity agreement and the
Fund's representations and warranties in this
Agreement shall remain operative and in full force
and effect and shall survive the delivery of any of
the Shares as provided in this Agreement. This
indemnity agreement shall inure exclusively to the
benefit of the Underwriter and its successors, the
Underwriter's officers and directors and their
respective estates and any such controlling person
and their successors and estates. The Fund shall
promptly notify the Underwriter of the commencement
of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
(b) The Underwriter agrees to indemnify, defend
and hold harmless the Fund, its Officers and
Directors and any person who controls the
Fund within the meaning of the 1933 Act, from
and against any and all claims, demands,
liabilities and expenses (including the cost
of investigating or defending such claims,
demands or liabilities and any attorney fees
incurred in connection therewith) which the
Fund, its Officers and Directors or any such
controlling person may incur under the
federal securities laws, the common law or
otherwise, but only to the extent that such
liability or expense incurred by the Fund,
its Officers and Directors or such
controlling person resulting from such claims
or demands shall arise out of or be based
upon (a) any alleged untrue statement of a
material fact contained in information
furnished in writing by the Underwriter to
the Fund specifically for use in the
Registration Statement or any related
Prospectus and/or SAI or shall arise out of
or be based upon any alleged omission to
state a material fact in connection with such
information required to be stated in the
Registration Statement or the related
Prospectus and/or SAI or necessary to make
such information not misleading and (b) any
alleged act or omission on the Underwriter's
part as the Fund's agent that has not been
expressly authorized by the Fund in writing.
Notwithstanding the foregoing, this indemnity
agreement, to the extent that it might
require indemnity of the Fund or any Officer,
Director or controlling person of the Fund,
shall not inure to the benefit of the Fund or
any Officer or Director or controlling person
thereof unless a court of competent
jurisdiction shall determine, or it shall
have been determined by controlling
precedent, that such result would not be
against public policy as expressed in the
federal securities laws and in no event shall
anything contained herein be so construed as
to protect any Director of the Fund against
any liability to the Fund or the Fund's
shareholders to which the Director would
otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence or
reckless disregard of the duties involved in
the conduct of his office.
This indemnity agreement is expressly
conditioned upon the Underwriter's being
notified of any action brought against the
Fund, its Officers or Directors or any such
controlling person, which notification shall
be given by
5
<PAGE> 6
letter or telegram addressed to the Underwriter at
its principal office in Houston, Texas, and sent to
the Underwriter by the person against whom such
action is brought, within ten (10) days after the
summons or other first legal process shall have been
served upon the Fund, its Officers, Directors or any
such controlling person. The failure to notify the
Underwriter of any such action shall not relieve the
Underwriter from any liability which it may have to
the person against whom such action is brought by
reason of any such alleged untrue statement or
omission otherwise than on account of the indemnity
agreement contained in this paragraph. The
Underwriter shall be entitled to assume the defense
of any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be
conducted by counsel chosen by the Underwriter and
approved by the Fund, which approval shall not be
unreasonably withheld. If the Underwriter elects to
assume the defense of any such suit and retain
counsel approved by the Fund, the defendant or
defendants in such suit shall bear the fees and
expenses of an additional counsel obtained by any of
them. Should the Underwriter elect not to assume the
defense of any such suit, or should the Fund not
approve of counsel chosen by the Underwriter, the
Underwriter will reimburse the Fund, its Directors or
the controlling person or persons named as defendant
or defendants in such suit, for the fees and expenses
of any counsel retained by the Fund or them. In
addition, the Fund shall have the right to employ
counsel to represent it, its Directors and any such
controlling person who may be subject to liability
arising out of any claim in respect of which
indemnity may be sought by the Fund against the
Underwriter hereunder if in the reasonable judgment
of the Fund it is advisable for the Fund, its
Officers, Directors or such controlling person to be
represented by separate counsel, in which event the
fees and expenses of such separate counsel shall be
borne by the Underwriter. This indemnity agreement
and the Underwriter's representations and warranties
in this Agreement shall remain operative and in full
force and effect and shall survive the delivery of
any of the Shares as provided in this Agreement.
This indemnity agreement shall inure exclusively to
the benefit of the Fund and its successors, the
Fund's Officers and Directors and their respective
estates and any such controlling person and their
successors and estates. The Underwriter shall
promptly notify the Fund of the commencement of any
litigation or proceeding against it in connection
with the issue and sale of the Shares.
12. Except as may be provided in one or more other agreements
between the Fund and the Underwriter or third parties, the
Fund will pay or cause to be paid (a) expenses (including the
fees and disbursements of its own counsel) of any registration
of the Shares under the 1933 Act, (b) expenses incident to the
issuance of the Shares, and (c) expenses (including the fees
and disbursements of its own counsel) incurred in connection
with the preparation, printing and distribution of the Fund's
Prospectuses, SAIs, and periodic and other reports sent to
holders of the Shares in their capacity as such. The
Underwriter shall prepare and provide necessary copies of all
sales literature subject to the Fund's approval thereof.
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<PAGE> 7
13. This Agreement having been approved by a majority vote of the
Directors of the Fund, as well as a majority vote of the
Directors who, except for their positions as Directors of the
Fund, are not "interested persons" (as defined in the
Investment Company Act) of the Fund and who have no direct or
indirect financial interest in the operation of this Agreement
("Disinterested Directors"), shall become effective as of the
date so written above and shall continue in effect from year
to year thereafter, but only so long as such continuance is
specifically approved at least annually (a)(i) by a vote of
the Directors of the Fund or (ii) by a vote of a majority of
the outstanding voting securities of the Fund or, where
required by applicable law, regulation or regulatory policy,
of each applicable series and/or class with respect to that
series or class, and (b) by a vote of a majority of the
Disinterested Directors, cast in person at a meeting called
for the purpose of voting on this Agreement.
Either party hereto may terminate this Agreement on any date,
without the payment of a penalty, by giving the other party at
least 60 days' prior written notice of such termination
specifying the date fixed therefor. In particular, this
Agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Disinterested
Directors, or by vote of a majority of the outstanding voting
securities of the Fund or, where required by applicable law,
regulation or regulatory policy, of each applicable series
and/or class with respect to that series or class, on not more
than 60 days' written notice to the Underwriter.
Without prejudice to any other remedies of the Fund provided
for in this Agreement or otherwise, the Fund may terminate
this Agreement at any time immediately upon the Underwriter's
failure to fulfill any of the obligations of the Underwriter
hereunder.
14. This Agreement shall automatically terminate in the event of
its assignment. In interpreting the provisions of this
Section 14, the definition of "assignment" contained in the
Investment Company Act shall be applied.
15. This Agreement may not be amended to increase the amount to be
spent by the Fund or a series or class hereunder without
approval of shareholders of the Fund or of each applicable
series or class. All material amendments to the Agreement must
be approved by the vote of the Board of Directors of the Fund,
including a majority of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting on such
amendment.
16. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party
at such address as such other party may designate for the
receipt of such notice.
17. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in
writing signed by the Fund and the Underwriter and, if
applicable, approved in the manner required by the Investment
Company Act.
18. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or
made invalid by a court decision, statute,
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<PAGE> 8
rule or otherwise, such illegality or invalidity shall not
affect the validity or enforceability of the remainder of this
Agreement.
19. This Agreement and the application and interpretation hereof
shall be governed exclusively by the laws of the State of
Texas.
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
and the Underwriter has caused its corporate seal to be affixed as of the day
and year first above written.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
-------------------------- -----------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
ATTEST: /s/ STEPHEN I. WINER By: /s/ MICHAEL J. CEMO
-------------------------- -----------------------------
Assistant Secretary President
8
<PAGE> 1
EXHIBIT 6(c)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM ADVISOR FUNDS, INC.
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made this ____ day of __________, 1998, by and between
AIM ADVISOR FUNDS, INC., a Maryland corporation (the "Company"), with respect
to each of the class B shares (the "Shares") of each series of shares of common
stock set forth on Schedule A to this agreement (the "Portfolios"), and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of the Shares to the public directly and through investment
dealers in the United States and throughout the world. If subsequent to the
termination of the Distributor's services to the Company pursuant to this
Agreement, the Company retains the services of another distributor, the
distribution agreement with such distributor shall contain provisions
comparable to Clauses FOURTH and SEVENTH hereof and Exhibit A hereto, and
without limiting the generality of the foregoing, will require such distributor
to maintain and make available to the Distributor records regarding sales,
redemptions and reinvestments of Shares necessary to implement the terms of
Clauses FOURTH, SEVENTH and EIGHTH hereof.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company
or personal holding company, or to the shareholders thereof, in exchange for
all or a majority of the shares or assets of any such company;
(B) the Company may issue Shares at their net asset value in
connection with certain classes of transactions or to certain classes of
persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such class is specified in
the then current prospectus of the applicable Shares; and
(C) the Company shall have the right to specify minimum amounts
for initial and subsequent orders for the purchase of Shares.
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<PAGE> 2
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on
behalf of the Shares shall, suspend its efforts to effectuate such sales at any
time when, in the opinion of the Distributor or of the Company, no sales should
be made because of market or other economic considerations or abnormal
circumstances of any kind;
(B) the Company may withdraw the offering of the Shares (i) at any
time with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation
of any governmental body having jurisdiction; and
(C) the Distributor, as agent, does not undertake to sell any
specific amount of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset
value per share of the applicable Shares. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The
Distributor may establish a schedule of contingent deferred sales charges to be
imposed at the time of redemption of the Shares, and such schedule shall be
disclosed in the current prospectus of each Portfolio. Such schedule of
contingent deferred sales charges may reflect variations in or waivers of such
charges on redemptions of Shares, either generally to the public or to any
specified class of shareholders and/or in connection with any specified class
of transactions, in accordance with applicable rules and regulations and
exemptive relief granted by the Securities and Exchange Commission, and as set
forth in the Portfolios' current prospectus(es). The Distributor and the
Company shall apply any then applicable scheduled variation in or waiver of
contingent deferred sales charges uniformly to all shareholders and/or all
transactions belonging to a specified class.
(B) The Distributor may pay to investment dealers and other
financial institutions through whom Shares are sold, such sales commission as
the Distributor may specify from time to time. Payment of any such sales
commissions shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by the Company to the Distributor or by the Company or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem the Shares from shareholders in
accordance with the terms set forth from time to time in the current prospectus
and statement of additional information of each Portfolio. The price to be
paid to a shareholder to redeem the Shares shall be equal to the net asset
value of the Shares being redeemed ("gross redemption proceeds"), less any
applicable contingent deferred sales charge, calculated pursuant to the then
applicable schedule of contingent deferred sales charges ("net redemption
proceeds"). The Distributor shall be entitled to receive the amount of the
contingent deferred sales charge that has been subtracted from gross redemption
proceeds (the "CDSC"), provided that the Shares being redeemed were (i) issued
by a Portfolio during the term of this Agreement and any predecessor
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<PAGE> 3
Agreement between the Company and the Distributor or (ii) issued by a Portfolio
during or after the term of this Agreement or any predecessor Agreement between
the Company and the Distributor in one or a series of free exchanges of Shares
for class B shares of another portfolio, which can be traced to Shares or class
B shares of another portfolio initially issued by a Portfolio or such other
portfolio during the term of this Agreement, any predecessor Agreement or any
other distribution agreement with the Distributor with respect to such other
portfolio (the "Distributor's Earned CDSC"). The Company shall pay or cause
the Company's transfer agent to pay the Distributor's Earned CDSC to the
Distributor on the date net redemption proceeds are payable to the redeeming
shareholder.
(E) The Distributor shall maintain adequate books and records to
identify Shares (i) issued by a Portfolio during the term of this Agreement and
any predecessor Agreement between the Company and the Distributor or (ii)
issued by a Portfolio during or after the term of this Agreement or any
predecessor Agreement between the Company and the Distributor in one or a
series of free exchanges of Shares for class B shares of another portfolio,
which can be traced to Shares or class B shares of another portfolio initially
issued by a Portfolio or such other portfolio during the term of this
Agreement, any predecessor Agreement or any other distribution agreement with
the Distributor with respect to such other portfolio and shall calculate the
Distributor's Earned CDSC, if any, with respect to such Shares, upon their
redemption. The Company shall be entitled to rely on Distributor's books,
records and calculations with respect to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Company in
connection with the sale and redemption of Shares. Except with respect to such
sales and redemptions, the Distributor shall act as principal in all matters
relating to the promotion of the sale of Shares and shall enter into all of its
own engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into agreements with investment dealers and financial
institutions selected by the Distributor, authorizing such investment dealers
and financial institutions to offer and sell the Shares to the public upon the
terms and conditions set forth therein, which shall not be inconsistent with
the provisions of this Agreement. Each agreement shall provide that the
investment dealer or financial institution shall act as a principal, and not as
an agent, of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the
final proof and distributing the prospectuses and statements of additional
information for the Shares (including supplements thereto) relating to public
offerings made by the Company pursuant to such prospectuses (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to existing shareholders of the Shares),
and any other promotional or sales literature used by the Distributor or
furnished by the Distributor to dealers in connection with such public
offerings, and expenses of advertising in connection with such public
offerings.
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<PAGE> 4
(B) Subject to the limitations, if any, of applicable law
including the NASD Conduct Rules (formerly, the NASD Rules of Fair Practice)
regarding asset-based sales charges, the Company shall pay to the Distributor
as a reimbursement for all or a portion of such expenses, or as reasonable
compensation for distribution of the Shares, an asset-based sales charge in an
amount equal to 0.75% per annum of the average daily net asset value of the
Shares of each Portfolio from time to time (the "Distributor's 12b-1 Share"),
such sales charge to be payable pursuant to the distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Distributor's
12b-1 Share shall be a percentage, which shall be recomputed periodically (but
not less than monthly) in accordance with Exhibit A to this Agreement. The
Distributor's 12b-1 Share shall accrue daily and be paid to the Distributor as
soon as practicable after the end of each calendar month within which it
accrues but in any event within 10 business days after the end of each such
calendar month (unless the Distributor shall specify a later date in written
instructions to the Company) provided, however, that any notices and
calculation required by Section EIGHTH: (B) and (C) have been received by the
Company.
(C) The Distributor shall maintain adequate books and records to
permit calculations periodically (but not less than monthly) of, and shall
calculate on a monthly basis, the Distributor's 12b-1 Share to be paid to the
Distributor. The Company shall be entitled to rely on Distributor's books,
records and calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or
pledge ("Transfer") to one or more designees (each an "Assignee"), its rights
to all or a designated portion of (i) the Distributor's 12b-1 Share (but not
the Distributor's duties and obligations pursuant hereto or pursuant to the
Plan), and (ii) the Distributor's Earned CDSC, free and clear of any offsets or
claims the Company may have against the Distributor. Each such Assignee's
ownership interest in a Transfer of a designated portion of a Distributor's
12b-1 Share and a Distributor's Earned CDSC is hereinafter referred to as an
"Assignee's 12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A
Transfer pursuant to this Section EIGHTH: (A) shall not reduce or extinguish
any claim of the Company against the Distributor.
(B) The Distributor shall promptly notify the Company in writing
of each Transfer pursuant to Section EIGHTH: (A) by providing the Company with
the name and address of each such Assignee.
(C) The Distributor may direct the Company to pay directly to an
Assignee such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such
event, Distributor shall provide the Company with a monthly calculation of (i)
the Distributor's Earned CDSC and Distributor's 12b-1 Share and (ii) each
Assignee's 12b-1 Portion and Assignee's CDSC Portion, if any, for such month
(the "Monthly Calculation"). The Monthly Calculation shall be provided to the
Company by the Distributor promptly after the close of each month or such other
time as agreed to by the Company and the Distributor which allows timely
payment of the Distributor's 12b-1 Share and Distributor's Earned CDSC and/or
the Assignee's 12b-1 Portion and Assignee's CDSC Portion. The Company shall
not be liable for any interest on such payments occasioned by delayed delivery
of the Monthly Calculation by the Distributor. In such event following receipt
from the Distributor of (i) notice of Transfer referred to in Section EIGHTH:
(B) and (ii) each Monthly Calculation, the Company shall make all payments
directly to the Assignee or Assignees in accordance with the information
provided in such notice and Monthly Calculation, on the same terms and
conditions as if such
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<PAGE> 5
payments were to be paid directly to the Distributor. The Company shall be
entitled to rely on Distributor's notices, and Monthly Calculations in respect
of amounts to be paid pursuant to this Section EIGHTH: (B).
(D) Alternatively, in connection with a Transfer the Distributor
may direct the Company to pay all of such Distributor's 12b-1 Share and
Distributor's Earned CDSC from time to time to a depository or collection agent
designated by any Assignee, which depository or collection agent may be
delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's
Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion
and the balance of the Distributor's 12b-1 Share (such balance, when
distributed to the Distributor by the depository or collection agent, the
"Distributor's 12b-1 Portion") and of the Distributor's Earned CDSC (such
balance, when distributed to the Distributor by the depository or collection
agent, the "Distributor's Earned CDSC Portion"), in which case only the
Distributor's 12b-1 Portion and Distributor's Earned CDSC Portion may be
subject to offsets or claims the Company may have against the Distributor.
(E) The Company shall not amend the Plan to reduce the amount payable
to the Distributor or any Assignee under Section SEVENTH: (B) hereof with
respect to the Shares for any Shares which have been issued prior to the date
of such amendment.
NINTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor shall
enter into Shareholder Service Agreements with investment dealers, financial
institutions and certain 401(K) plan service providers (collectively "Service
Providers") selected by the Distributor for the provision of certain continuing
personal services to customers of such Service Providers who have purchased
Shares. Such agreements shall authorize Service Providers to provide
continuing personal shareholder services to their customers upon the terms and
conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each Shareholder Service Agreement shall provide
that the Service Provider shall act as principal, and not as an agent of the
Company.
(B) Shareholder Service Agreements may provide that the Service
Providers may receive a service fee in the amount of .25% of the average daily
net assets of the Shares held by customers of such Service Providers provided
that such Service Providers furnish continuing personal shareholder services to
their customers in respect of such Shares. The continuing personal services to
be rendered by Service Providers under the Shareholder Service Agreements may
include, but shall not be limited to, some or all of the following:
distributing sales literature; answering routine customer inquiries concerning
the Company; assisting customers in changing dividend elections, options,
account designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of Shares; assisting
in the establishment and maintenance of or establishing and maintaining
customer accounts and records and the processing of purchase and redemption
transactions; performing subaccounting; investing dividends and any capital
gains distributions automatically in the Company's shares; providing periodic
statements showing a customer's account balance and the integration of such
statements with those of other transactions and balances in the customer's
account serviced by the Service Provider; forwarding applicable prospectus,
proxy statements, reports and notices to customers who
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<PAGE> 6
hold Shares and providing such other information and services as the Company or
the customers may reasonably request.
(C) The Distributor may advance service fees payable to Service
Providers pursuant to the Plan or any other distribution plan adopted by the
Company with respect to Shares of one or more of the Portfolios pursuant to
Rule 12b-1 under the 1940 Act; and thereafter the Distributor may be reimbursed
for such advances through retention of service fee payments during the period
for which the service fees were advanced.
ELEVENTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933, as amended,
and of all other federal and state laws, rules and regulations governing the
issuance and sale of the Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Company shall indemnify the Distributor against any and
all claims, demands, liabilities and expenses which the Distributor may incur
under the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Shares, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Company in
connection therewith by or on behalf of the Distributor. The Distributor shall
indemnify the Company and the Shares against any and all claims, demands,
liabilities and expenses which the Company or the Shares may incur arising out
of or based upon (i) any act or deed of the Distributor or its sales
representatives which has not been authorized by the Company in its prospectus
or in this Agreement and (ii) the Company's reliance on the Distributor's
books, records, calculations and notices in Sections FOURTH: (E), SEVENTH: (C),
EIGHTH: (B), EIGHTH: (C) and EIGHTH: (D).
(B) The Distributor shall indemnify the Company and the Shares
against any and all claims, demands, liabilities and expenses which the Company
or the Shares may incur under the Securities Act of 1933, as amended, or common
law or otherwise, arising out of or based upon any alleged untrue statement of
a material fact contained in any registration statement or prospectus of the
Shares, or any omission to state a material fact therein if such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company in connection therewith by or on behalf of the
Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the transfer agent(s) of the
Shares, or for any failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Company to
take any action contrary to any provision of its Articles of Incorporation or
to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the
Shares of each Portfolio upon its approval by the Board of Directors of the
Company and by vote of a majority of the Company's directors who are not
interested parties to this Agreement or "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person
at a
6
<PAGE> 7
meeting called for such purpose, shall continue in force and effect until
__________, 2000, and from year to year thereafter, provided, that such
continuance is specifically approved with respect to the Shares of each
Portfolio at least annually (a)(i) by the Board of Directors of the Company or
(ii) by the vote of a majority of the outstanding Shares of such class of such
Portfolio, and (b) by vote of a majority of the Company's directors who are not
parties to this Agreement or "interested persons" (as defined in Section
2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a
meeting called for such purpose.
FIFTEENTH:
(A) This Agreement may be terminated with respect to the Shares of
any Portfolio, at any time, without the payment of any penalty, by vote of the
Board of Directors of the Company or by vote of a majority of the outstanding
Shares of such Portfolio, or by the Distributor, on sixty (60) days' written
notice to the other party; and
(B) This Agreement shall also automatically terminate in the event
of its assignment, the term "assignment" having the meaning set forth in
Section 2(a)(4) of the 1940 Act; provided, that, subject to the provisions of
the following sentence, if this Agreement is terminated for any reason, the
obligations of the Company and the Distributor pursuant to Sections FOURTH:
(D), FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and
TWELFTH: (A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Company pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to
any or all Shares of any or all Portfolios shall not affect the obligations of
the Company pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH:
(D) and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's
12b-1 Share or Distributor's Earned CDSC shall not cause a termination of this
Agreement or be deemed to be an assignment for purposes of Section FIFTEENTH:
(B) above.
SIXTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, the addresses of both the Company and the
Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM ADVISOR FUNDS, INC.
By:
-------------------------------
Name: Robert H. Graham
Title: President
Attest:
- ------------------------------
Name:
Title:
A I M DISTRIBUTORS, INC.
By:
-------------------------------
Name: Michael J. Cemo
Title: President
Attest:
- ------------------------------
Name:
Title:
8
<PAGE> 9
SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM ADVISOR FUNDS, INC.
CLASS B SHARES
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
9
<PAGE> 10
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio
shall be 100 percent until such time as the Distributor shall cease to serve as
exclusive distributor of the Shares of such Portfolio and thereafter shall be a
percentage, recomputed first on the date of any termination of the
Distributor's services as exclusive distributor of Shares of any Portfolio and
thereafter periodically (but not less than monthly), representing the
percentage of Shares of such Portfolio outstanding on each such computation
date allocated to the Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined
terms used herein shall have the meaning assigned to such terms in the
Distribution Agreement and the following terms shall have the following
meanings:
"Commission Shares" shall mean shares of the Portfolio
or another portfolio the redemption of which would, in the absence of the
application of some standard waiver provision, give rise to the payment of a
CDSC and shall include Commission Shares which due to the expiration of the
CDSC period no longer bear a CDSC.
"Distributor" shall mean the Distributor.
"Other Distributor" shall mean each person appointed
as the exclusive distributor for the Shares of the Portfolio after the
Distributor ceases to serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's
12b-1 Share in respect of a particular Portfolio:
(a) There shall be allocated to the Distributor
and each Other Distributor all Commission Shares of such Portfolio which were
sold while such Distributor or such Other Distributor, as the case may be, was
the exclusive distributor for the Shares of the Portfolio, determined in
accordance with the transfer records maintained for such Portfolio.
(b) Reinvested Shares: On the date that any
Shares are issued by a Portfolio as a result of the reinvestment of dividends
or other distributions, whether ordinary income, capital gains or
exempt-interest dividend or distributions ("Reinvested Shares"), Reinvested
Shares shall be allocated to the Distributor and each Other Distributor in a
number obtained by multiplying the total number of Reinvested Shares issued on
such date by a fraction, the numerator of which is the total number of all
Shares outstanding in such Fund as of the opening of business on such date and
allocated to the Distributor or Other Distributor as of such date of
determination pursuant
A-1
<PAGE> 11
to these allocation procedures and the denominator is the total number of
Shares outstanding as of the opening of business on such date.
(c) Exchange Shares: There shall be allocated to
the Distributor and each Other Distributor, as the case may be, all Commission
Shares of such Portfolio which were issued during or after the period referred
to in (a) as a consequence of one or more free exchanges of Commission Shares
of the Portfolio or of another portfolio (other than Free Appreciation Shares)
(the "Exchange Shares"), which in accordance with the transfer records
maintained for such Portfolio can be traced to Commission Shares of the
Portfolio or another portfolio initially issued by the Company or such other
portfolio during the time the Distributor or such Other Distributor, as the
case may be, was the exclusive distributor for the Shares of the Portfolio or
such other portfolio.
(d) Free Appreciation Shares: Shares (other than
Exchange Shares) that were acquired by the holders of such Shares in a free
exchange of Shares of any other Portfolio, which represent the appreciated
value of the Shares of the exiting portfolio over the initial purchase price
paid for the Shares being redeemed and exchanged and for which the original
purchase date and the original purchase price are not identified on an on-going
basis, shall be allocated to the Distributor and each Other Distributor ("Free
Appreciation Shares") daily in a number obtained by multiplying the total
number of Free Appreciation Shares issued by the exiting portfolio on such date
by a fraction, the numerator of which is the total number of all Shares
outstanding as of the opening of business on such date allocated to the
Distributor or such Other Distributor as of such date of determination pursuant
to these allocation procedures and the denominator is the total number of
Shares outstanding as of the opening of business on such date.
(e) Redeemed Shares: Shares (other than
Reinvested Shares and Free Appreciation Shares) that are redeemed will be
allocated to the Distributor and each Other Distributor to the extent such
Share was previously allocated to the Distributor or such Other Distributor in
accordance with the rules set forth in 2(a) or (c) above. Reinvested Shares
and Free Appreciation Shares that are redeemed will be allocated to the
Distributor and each Other Distributor daily in an amount equal to the number
of Free Appreciation Shares and Reinvested Shares of such Portfolio being
redeemed on such date, which amount is obtained by multiplying the total number
of Free Appreciation Shares and Reinvested Shares being redeemed by such
Portfolio on such date by a fraction, the numerator of which is the total
number of all Free Appreciation Shares and Reinvested Shares of such Portfolio
outstanding as of the opening of business on such date and the denominator is
the total number of Free Appreciation Shares and Reinvested Shares of such
Portfolio outstanding as of the opening of business on such date.
The Fund shall use its best efforts to assure that the transfer agents
and sub-transfer agents for each Portfolio maintain the data necessary to
implement the foregoing rules. If, notwithstanding
A-2
<PAGE> 12
the foregoing, the transfer agents or sub-transfer agents for such Portfolio
are unable to maintain the data necessary to implement the foregoing rules as
written, and if the Distributor shall cease to serve as exclusive distributor
of the Shares of the Portfolio, the Distributor and the Portfolio agree to
negotiate in good faith with each other, with the transfer agents and
sub-transfer agents for such Portfolio and with any third party that has
obtained an interest in the Distributor's 12b-1 Share in respect of such
Portfolio with a view to arriving at mutually satisfactory modifications to the
foregoing rules designed to accomplish substantially identical results on the
basis of data which can be made available.
A-3
<PAGE> 1
EXHIBIT 6(d)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
concession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concession
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund*** No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund*** Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
10/97
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Fund, AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
***Fund closed to investments on October 3, 1997.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
10/97
<PAGE> 1
EXHIBIT 6(e)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund *** No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund *** Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
10/97
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Management Fund, AIM Cash Reserve Shares, AIM
Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
***Fund closed to investments on October 3, 1997.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
10/97
<PAGE> 1
EXHIBIT 8(b)
CUSTODIAN CONTRACT
Between
AIM ADVISOR FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . . 7
2.9. Appointment of Agents . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in U.S. Securities System . . . 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Portfolio Securities . . . . 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . 11
3.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Agreements with Foreign Banking Institutions . . . . . 11
3.6 Access of Independent Accountants of the Fund . . . . . 12
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . 12
3.8 Transactions in Foreign Custody Account . . . . . . . . 12
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . 12
3.10 Liability of Custodian . . . . . . . . . . . . . . . . 13
3.11 Reimbursement for Advances . . . . . . . . . . . . . . 13
3.12 Monitoring Responsibilities . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . 14
3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . 14
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . 15
6. Actions Permitted Without Express Authority . . . . . . . . . 15
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . 16
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income . . . . . . . . 16
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Opinion of Fund's Independent Accountants . . . . . . . . . . 17
11. Reports to Fund by Independent Public Accountants . . . 17
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . 17
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . 17
14. Effective Period, Termination and Amendment . . . . . . . . . 19
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . 19
16. Interpretive and Additional Provisions . . . . . . . . . . . . 20
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . 20
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . 21
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . 21
20. Reproduction of Documents . . . . . . . . . . . . . . . . . . 21
21. Shareholder Communications . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between AIM Advisor Funds, Inc., a corporation organized
and existing under the laws of Maryland, having its principal place of business
at 11 Greenway Plaza, Suite 100, Houston, Texas 77046, hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts trust company,
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in seven series, the
AIM Advisor Cash Management Series, AIM Advisor Flex Fund, AIM Advisor Income
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Advisor MultiFlex Fund and AIM Advisor Real Estate Fund (such series
together with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 17, being herein referred
to as the "Portfolio(s)");
NOW THEREFORE, in consideration Of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of capital
stock of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Funds foreign securities on behalf of the applicable
<PAGE> 5
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Custodian with Respect to the Property of the Fund Held by
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each, a "U.S. Securities System")
and (b) commercial paper of an issuer for which State Street Bank and
Trust Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
2
<PAGE> 6
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund on
behalf of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's account
in the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible
for the delivery of securities owned by the Portfolio prior to
the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by
the Fund on behalf of the Portfolio, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the
3
<PAGE> 7
Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by the Portfolio of the
Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the currently effective
prospectus and statement of additional information of the Fund,
related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the
Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the Portfolio
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment Advisor as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant
4
<PAGE> 8
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect an a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the
Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
5
<PAGE> 9
2.7 Payment of fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this purpose)
registered in the name of the Portfolio or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio or (e)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected prior
to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6
<PAGE> 10
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Fund on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities to
the same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
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2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the account
of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon (i) receipt of advice
from the U.S. Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all
advices from the U.S. Securities System of transfers of
securities for the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the Custodian and
be provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as
it may have against the U.S. Securities System; at the election
of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that the Portfolio has not been made whole for any such
loss or damage.
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2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the account
of the Portfolio upon the making of an entry on the records of
the Custodian to reflect such payment and transfer of securities
to the account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon the making
of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as
the Fund may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund on behalf
of the Portfolio, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
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<PAGE> 13
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii)
for the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper Instructions
from the Fund on behalf of the applicable Portfolio, a certified copy
of a resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and
the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being held for
the Portfolio. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Portfolio all written information
received by the Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making the tender
or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction,
the Portfolio
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shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board of
Directors, the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents
in such amounts as the Custodian or the Fund may determine to be
reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Fund, the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside of the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are collectively referred
to herein as the "Securities Systems"). Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 [Reserved.]
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3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the Fund,
will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the
Custodian; and (e) assets of the Portfolios held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records
of any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institution
for the Custodian on behalf of each applicable Portfolio indicating, as
to securities acquired for a Portfolio, the identity of the entity
having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of Sections
2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the
foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities received
for the account of each applicable Portfolio and delivery of securities
maintained for the account of each applicable Portfolio may be effected
in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt with the
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<PAGE> 16
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this Contract,
and the Fund agrees to hold any such nominee harmless from any liability
as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign sub-
custodian shall require the institution to exercise reasonable care in
the performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. Bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Portfolio
shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be
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<PAGE> 17
entitled to utilize available cash and to dispose of such Portfolios
assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined
below $200 million (in each case computed in accordance with generally
accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both,
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the tax
law of jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental reporting.
The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to
any claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will
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<PAGE> 18
provide timely notification to the Fund on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian shall honor
checks drawn on the Custodian by a holder of Shares, which checks have been
furnished by the Fund to the holder of Shares, when presented to the Custodian
in accordance with such procedures and controls as are mutually agreed upon
from time to time between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract includes the
following:
(a) a writing signed or initialed by one or more person or persons as
the Board of Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type or transaction
involved, including a specific statement of the purpose for which such action
is requested;
(b) communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors and the Custodian are
satisfied that procedures relating to the use of such electro-mechanical and
electronic devices afford adequate safeguards for the Portfolios' assets and
have been followed. The Fund shall provide a Certificate of the Secretary or
the Assistant Secretary as to the authorization for use of electro-mechanical
or electronic devices by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Fund's Board of Directors;
(c) oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing or through
electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset account
which has been established pursuant to Section 2.12, hereof, shall include
instructions received by the Custodian in accordance with the provisions of any
three-party agreement, to which the Fund and the Custodian are each a party,
governing such account or accounts.
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6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board of Directors of the
Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Directors pursuant to the Articles of
Incorporation as described in such vote, and such vote may be considered as in
full force and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Funds currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value
per share and the daily income of each
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<PAGE> 20
Portfolio shall be made at the time or times described from time to time in the
Fund's currently effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the
Fund and employees and agents of the Securities and Exchange Commission, The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Account
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
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So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances
beyond the reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of
trading on or the closure of any securities market, power or other mechanical
failures or interruptions, communications disruptions, acts of war or
terrorism, riots, revolutions, work stoppages, natural disasters or other
similar events or acts; (ii) errors by the Fund or the Investment Advisor in
their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by
a Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system that is not an affiliate of the Custodian to deliver to the Custodian's
sub-custodian or agent securities purchased or in the remittance or payment
made in connection with securities sold; (v) any delay, or failure of any
company, corporation, or other body in charge of registering or transferring
securities in the name of the Custodian, the Fund, the Custodian's
sub-custodians, nominees or agents or any consequential losses arising out of
such delay or failure to transfer such securities including non-receipt of
bonus, dividends and rights and other accretions or benefits; (vi) delays or
inability to perform its duties due to any disorder in market infrastructure
with respect to any particular security or Securities System; and (vii) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or any other country, or political
subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
or which action may, in the opinion of the
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Custodian, result in the Custodian or its nominee assigned to the Fund or the
Portfolio being liable for the payment of money or incurring liability of some
other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring
the Custodian to take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement)
for the benefit of a Portfolio or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except such as
may arise from its or its nominees own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of the
applicable Portfolio shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent necessary
to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio,
as required by Rule 17f-4 under the Investment Company Act of 1940, as amended
and that the Custodian shall not with respect to a Portfolio act under Section
2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors has approved
the initial use of the Direct Paper System by such Portfolio; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund on behalf
of one or more of the Portfolios may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
19
<PAGE> 23
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements,
Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination; (i) deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder; (ii) transfer to an account of
the successor custodian all of the securities of each such Portfolio held in a
Securities System; and (iii) transfer to the successor custodian all records
created and maintained by the Custodian with respect to each such Portfolio
pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the securities of
each such Portfolio held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition
20
<PAGE> 24
to the provisions of this Contract as may in their joint opinion be consistent
with the general tenor of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
Articles of Incorporation of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the AIM Advisor Cash Management Fund, AIM Advisor Flex Fund,
AIM Advisor Income Fund, AIM Advisor International Value Fund, AIM Advisor
Large Cap Value Fund, AIM Advisor MultiFlex Fund and AIM Advisor Real Estate
Fund with respect to which the Fund desires to have the Custodian render
services as custodian under the terms hereof, it shall so notify the Custodian
in writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
20. Reproduction of Documents
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding, whether or
not the original is in existence and whether or not such reproduction was made
by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
21. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and
21
<PAGE> 25
holdings of beneficial owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the Fund to
indicate whether the Fund authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose stock the Fund owns.
If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
do not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate
communications. Please indicate below whether the Fund consent or object by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Funds name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
22
<PAGE> 26
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1997.
ATTEST AIM ADVISOR FUNDS, INC.
By
------------------------- ----------------------------
Name: Name:
Title:
ATTEST STATE STREET BANK AND TRUST COMPANY
By
------------------------- ----------------------------
Thomas M. Lenz Ronald E. Logue
Executive Vice President
<PAGE> 27
SCHEDULE A
TO CUSTODIAN CONTRACT BETWEEN
AIM ADVISOR FUNDS, INC. AND
STATE STREET BANK AND TRUST COMPANY
The following foreign sub-custodians have been approved by the Board of
Directors of AIM Advisor Funds, Inc. for use as sub-custodians for the
securities and other assets of AIM Advisor Flex Fund, AIM Advisor International
Value Fund, AIM Advisor Large Cap Value Fund, AIM Advisor MultiFlex Fund, and
AIM Advisor Real Estate Fund:
<TABLE>
<CAPTION>
Country Sub-Custodian Approved
<S> <C>
Argentina Citibank, N.A. [x]
Australia Westpac Banking Corporation [x]
Austria GiroCredit Bank Aktiengesellschaft [x]
der Sparkassen
Bahrain The British Bank of the Middle East [ ]
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank [x]
Belgium Generale Bank [x]
Bermuda The Bank of Bermuda Limited [ ]
Botswana Barclays Bank of Botswana Limited [ ]
Brazil Citibank, N.A. [x]
Canada Canada Trustco Mortgage Company [x]
Chile Citibank, N.A. [x]
People's Republic of China The Hongkong and Shanghai Banking [x]
Corporation Limited, Shanghai and
Shenzhen branches
Colombia Cititrust Colombia S.A. [x]
Sociedad Fiduciaria
Cyprus Barclays Bank PLC [x]
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni Banka A.S. [x]
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
Country Sub-Custodian Approved
<S> <C> <C>
Denmark Den Danske Bank [x]
Ecuador Citibank, N.A. [ ]
Egypt National Bank of Egypt [x]
Finland Merita Bank Limited [x]
France Banque Paribas [x]
Germany Dresdner Bank AG [x]
Ghana Barclays Bank of Ghana Limited
Greece National Bank of Greece S.A. [x]
Hong Kong Standard Chartered Bank [x]
Hungary Citibank Budapest Rt. [x]
India Deutsche Bank AG [x]
The Hongkong and Shanghai [x]
Banking Corporation Limited
Indonesia Standard Chartered Bank [x]
Ireland Bank of Ireland [x]
Israel Bank Hapoalim B.M. [x]
Italy Banque Paribas [x]
Ivory Coast Societe Generale de Banques
en Cote d Ivoire
Japan The Daiwa Bank, Limited
The Fuji Bank, Limited
The Sumitomo Trust & Banking Co., [x]
Ltd.
Jordan The British Bank of the Middle East
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya limited
Republic of Korea SEOULBANK [x]
</TABLE>
2
<PAGE> 29
<TABLE>
<CAPTION>
Country Sub-Custodian Approved
<S> <C>
Lebanon The British Bank of the Middle
East (as delegate of the Hongkong
and Shanghai Banking Corporation
Limited)
Malaysia Standard Chartered Bank Malaysia [x]
Berhad
Mauritius The Hongkong and Shanghai Banking
Corporation Limited
Mexico Citibank Mexico, S.A. [x]
Morocco Banque Commerciale du Maroc [ ]
Netherlands MeesPierson N.V. [x]
New Zealand ANZ Banking Group (New Zealand) [x]
Limited
Norway Christiania Bank og Kreditkasse [x]
Oman The British Bank of the Middle East [ ]
(as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
Pakistan Deutsche Bank AG [x]
Peru Citibank N.A. [x]
Philippines Standard Chartered Bank [x]
Poland Citibank Poland S.A. [x]
Portugal Banco Comercial Portugues [x]
Russia Credit Suisse First Boston, Zurich [x]
via Credit Suisse First Boston
Limited, Moscow
Singapore The Development Bank of Singapore [x]
Ltd.
Slovak Republic Ceskoslovenska Obchodna Banka A.S. [x]
South Africa Standard Bank of South Africa [x]
Limited
Spain Banco Santander, S.A. [x]
Sri Lanka The Hongkong and Shanghai Banking [x]
Corporation Limited
Swaziland Barclays Bank of Swaziland Limited
</TABLE>
3
<PAGE> 30
<TABLE>
<CAPTION>
Country Sub-Custodian Approved
<S> <C> <C>
Sweden Skandinaviska Enskilda Banken [x]
Switzerland Union Bank of Switzerland [x]
Taiwan - R.O.C. Central Trust of China [x]
Thailand Standard Chartered Bank [x]
Turkey Citibank, N.A. [x]
United Kingdom State Street Bank and Trust Company [x]
Uruguay Citibank, N.A [x]
Venezuela Citibank, N.A. [x]
Zambia Barclays Bank of Zambia Limited
Zimbabwe Barclays Bank of Zimbabwe Limited
</TABLE>
Certified:
/s/ OFELIA M. MAYO
- --------------------------------
Ofelia Mayo
Assistant Secretary
Date: November 7, 1997
4
<PAGE> 1
EXHIBIT 9(b)
OPERATING SERVICES AGREEMENT
AGREEMENT made as of this 4th day of August, 1997, by and between AIM
Advisor Funds, Inc., a Maryland corporation, (the "Fund"), and A I M Advisors,
Inc., a Delaware corporation (hereinafter referred to as "AIM").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a diversified, open-end
management investment company and is divided into seven series (the "Shares"),
and which may be divided into additional series, each representing an interest
in a separate portfolio of investments (such series as are presently structured
being designated as the AIM Advisor Large Cap Value Fund, AIM Advisor Income
Fund, AIM Advisor Flex Fund, AIM Advisor MultiFlex Fund, AIM Advisor Real
Estate Fund, AIM Advisor International Value Fund, and AIM Advisor Cash
Management Fund, hereinafter referred to as the "Series"); and
WHEREAS, AIM is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, sub-accounting,
and recordkeeping services to certain investment companies, including the Fund;
and
WHEREAS, the Fund desires to retain AIM, or companies retained by AIM
at its expense, to render certain operational services which are necessary for
the day-to-day operations of the Fund's Series (the "Services") in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, AIM desires to be retained to perform directly, or to retain
companies at its expense to perform, such services on said terms and
conditions;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Fund and AIM agree as follows:
1. The Fund hereby retains AIM to provide, or, upon receipt of
written approval of the Fund arrange for other companies,
including affiliates of AIM, to provide to the Series: (a)
such accounting services and functions, including costs and
expenses of any independent public accountants, as are
reasonable necessary for the operation of the Series; (b) such
legal services and functions, including costs and expenses of
any outside legal counsel that may be retained to perform
non-litigation-related legal services for the Fund or the
Directors of the Fund, as are reasonably necessary for the
operation of the Series; (c) such dividend disbursing agent,
dividend reinvestment agent, transfer agent, and registrar
services and functions (including answering inquiries related
to shareholder Fund accounts) as are reasonably necessary for
the operation of the Series; (d) such custodian and depository
services and functions as are reasonably necessary for the
operation of the Series; (e) such independent pricing services
as are reasonably necessary for the operation of the Series;
(f) such shareholder reports (including dividend notices,
statements of additional information and prospectuses sent to
existing shareholders) and reports to broker-dealers,
financial institutions and other organizations which render
services and assistance in connection with the
<PAGE> 2
distribution of the shares of the Series describing the
operations of the Series as are reasonably necessary for the
operation of the Series; (g) such sub-accounting and
recordkeeping services and functions (other than those books
and records required to be maintained by AIM under the
Investment Advisory Agreement between the Fund and AIM dated
August 2, 1997 (the "Investment Advisory Agreement"),
including maintenance of shareholder records and shareholder
information concerning the status of their Fund accounts by
investment advisers, broker-dealers, financial institutions,
and other organizations on behalf of AIM, as are reasonably
necessary for the operation of the Series; and (h) such
administrative services and functions (other than those
administrative responsibilities specifically assumed by AIM
under the Investment Advisory Agreement), including the fees
and expenses involved in maintaining the registration and
qualification of the Fund and of its Series' shares under laws
administered by the Securities and Exchange Commission, the
various states, or under other applicable regulatory
requirements, the costs of printing and distributing notices
of shareholders' meetings, proxy statements, and other
communications to the Fund's shareholders, as well as all
expenses of shareholders' meetings and Directors' meetings,
all costs, fees or other expenses arising in connection with
the organization of new Series, including initial registration
and qualification of the new Series under the Act and under
the Securities Act of 1933, as amended, the initial
determination of the new Series' tax status and any rulings
obtained for this purpose, the initial registration and
qualification of the new Series' securities under the laws of
any state and the approval of the new Series' operations by
any other federal or state authority, insurance premiums, the
costs of designing, printing, and issuing certificates
representing shares of the Fund's Series, premiums for the
fidelity bond maintained by the Fund pursuant to Section 17(g)
of the Act and rules promulgated thereunder (except for such
premiums as may be allocated to third parties, as insureds
thereunder), and association and institute dues, as are
reasonably necessary for the operation of the Series. All
books and records prepared and maintained by AIM for the Fund
under this Agreement shall be the property of the Fund and,
upon request therefor, AIM shall surrender to the Fund such
of the books and records so requested.
2. AIM shall, at its own expense, maintain such staff and employ
or retain such personnel and consult with such other persons
as it shall from time to time determine to be necessary or
useful to the performance of its obligations under this
Agreement. Without limiting the generality of the foregoing,
such staff and personnel shall be deemed to include officers
of AIM and persons employed or otherwise retained by AIM to
provide or assist in providing Services to the Series.
3. AIM shall, at its own expense, provide such office space,
facilities and equipment (including, but not limited to,
computer equipment, telephone and other communication lines
and supplies) and such clerical help and personnel and other
services as shall be necessary to provide the Services to the
Series.
<PAGE> 3
4. The Fund will, from time to time, furnish or otherwise make
available to AIM such information relating to the business and
affairs of the Series as AIM may reasonably require in order
to discharge its duties and obligations hereunder.
5. For the services rendered, facilities furnished, and expenses
assumed by AIM under this Agreement, the Fund shall pay to AIM
a fee computed on a daily basis and paid on a monthly basis.
For purposes of each daily calculation of this fee, the most
recently determined net asset value of each Series, as
determined by a valuation made in accordance with the Fund's
procedure for calculating Series net asset value as described
in the Fund's Prospectus and/or Statement of Additional
Information, shall be used. The fee to AIM under this
Agreement shall be computed at the annual rate of 0.45% of
each Series' daily net assets as so determined. During any
period when the determination of a Series' net asset value is
suspended by the directors of the Fund, the net asset value of
a share of that Series as of the last business day prior to
such suspension shall, for the purpose of this Paragraph 5, be
deemed to be the net asset value at the close of each
succeeding business day until it is again determined.
6. AIM will permit representatives of the Fund including the
Fund's independent auditors to have reasonable access to the
personnel and records of AIM in order to enable such
representatives to monitor the quality of services being
provided and the level of fees due AIM pursuant to this
Agreement. In addition, AIM shall promptly deliver to the
board of directors of the Fund such information as may
reasonably be requested from time to time to permit the board
of directors to make an informed determination regarding
continuation of this Agreement and the payments contemplated
to be made hereunder.
7. This Agreement shall continue in effect from year to year
provided such continuance is approved at least annually by the
vote of a majority of the directors of the Fund who are not
parties to this Agreement or "interested persons" (as defined
in the Act) of any such party, which vote must be cast in
person at a meeting called for the purpose of voting on such
approval; and further provided, however, that (a) the Fund
may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty (30) days' written notice
to AIM; (b) the Agreement shall immediately terminate in the
event of its assignment (within the meaning of the Act and the
Rules thereunder) unless the board of directors of the Fund
approves such assignment; and (c) AIM may terminate this
Agreement without payment of penalty on sixty (60) days'
written notice to the Fund. Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed
post-paid, to the other party at the principal office of such
party.
8. This Agreement shall be construed in accordance with the laws
of the State of Texas and the applicable provisions of the
Act. To the extent the applicable law of the State of Texas
or any of the provisions herein conflict with the applicable
provisions of the Act, the latter shall control.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ Ofelia M. Mayo By: /s/ Robert H. Graham
------------------------- -------------------------
Assistant Secretary President
A I M ADVISORS, INC.
ATTEST: /s/ Stephen I. Winer By: /s/ Robert H. Graham
------------------------- -------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT 9(c)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM ADVISOR FUNDS, INC.
A I M ADVISORS, INC.
AND
A I M FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF AIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 6 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 7 COVENANTS OF THE FUND AND THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 8 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 9 ADDITIONAL PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 10 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 11 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 12 TEXAS LAW TO APPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 14 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 4th day of August, 1997, by and between AIM
ADVISOR FUNDS, INC. , a Maryland Corporation, having its principal office and
place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the
"Fund"), A I M Advisors, Inc., a Delaware Corporation ("AIM") and A I M Fund
Services, Inc., a Delaware corporation both having their 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");
WHEREAS, the Fund is authorized to issue shares in separate series and
classes, with each such series representing interests in a separate portfolio
of securities and other assets and each such class having different
distribution arrangements;
WHEREAS, the Fund on behalf of each class of each of the portfolios
thereof (the "Portfolios") desires to appoint the Transfer Agent as its
transfer agent, and agent in connection with certain other activities, with
respect to the Portfolios, and the Transfer Agent desires to accept such
appointment; and
WHEREAS, the Fund and AIM have entered into an Operating Services
Agreement which provides, among other things, that AIM assume the fees and
expenses of transfer agent services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Transfer Agent to act as,
and the Transfer Agent agrees to act as, its transfer agent for the authorized
and issued shares of beneficial interest of the Fund representing interests in
each class of each of the respective Portfolios ("Shares"), dividend disbursing
agent, and agent in connection with any accumulation or similar plans provided
to shareholders of each of the Portfolios (the "Shareholders"), including
without limitation any periodic investment plan or periodic withdrawal program,
as provided in the currently effective prospectus and statement of additional
information (the "Prospectus") of the Fund on behalf of the Portfolios.
1.02 The Transfer Agent agrees that it will perform the following
services:
(a) The Transfer Agent shall, in accordance with procedures
established from time to time by agreement between the Fund on behalf of each
of the Portfolios, as applicable, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase
of Shares, and promptly deliver payment and
appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the
Articles of Incorporation and By-Laws of the
Fund (the "Custodian");
1
<PAGE> 4
(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;
(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-1O(e) a
record of the total number of Shares which are
authorized, based upon data provided to it by
the Fund, and issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph
(a), the Transfer Agent shall: (i) perform the customary services of a transfer
agent, including but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and prospectuses to current Shareholders, preparing
and mailing confirmation forms and statements of accounts to Shareholders for
all purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
on behalf of each Portfolio and the Transfer Agent. The Transfer Agent may at
times perform only a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this
Agreement, AIM agrees on behalf of each of the Portfolios to pay the Transfer
Agent fees as set out in the initial fee schedule attached hereto. Such fees
and out-of- pocket expenses and advances identified under Section 2.02
2
<PAGE> 5
below may be changed from time to time subject to mutual written agreement
between AIM and the Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, AIM
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the Transfer
Agent at the request or with the consent of AIM or the Fund, will be reimbursed
by AIM on behalf of the applicable Shares.
2.03 AIM agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses following the mailing of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all Shareholder accounts shall be advanced to the Transfer Agent by
AIM at least seven (7) days prior to the mailing date of such materials.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware
and in Texas.
3.03 It is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It is registered as a Transfer Agent as required by the
federal securities laws.
3.07 This Agreement is a legal, valid and binding obligation to
it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement.
3
<PAGE> 6
4.03 All proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933,
as amended on behalf of each of the Portfolios is currently effective and will
remain effective, with respect to all Shares of the Fund being offered for
sale.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AIM
AIM represents and warrants to the Transfer Agent that:
5.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
5.02 It is duly qualified to carry on its business in Delaware
and Texas.
5.03 It is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform this Agreement.
5.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5.05 This Agreement is a legal, valid and binding obligation to
it.
ARTICLE 6
INDEMNIFICATION
6.01 The Transfer Agent shall not be responsible for, and the
Fund shall on behalf of the applicable Portfolio, indemnify and hold the
Transfer Agent harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) all actions of the Transfer Agent or its agents or
subcontractors required to be taken pursuant to this Agreement, provided that
such actions are taken in good faith and without negligence or willful
misconduct;
(b) the Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) the reliance on or use by the Transfer Agent or its agents
or subcontractors of information, records and documents or services which (i)
are received or relied upon by the Transfer Agent or its agents or
subcontractors and/or furnished to it or performed by on behalf of the Fund,
and (ii) have been prepared, maintained and/or performed by the Fund or any
other person or firm on behalf of the Fund; provided such actions are taken in
good faith and without negligence or willful misconduct;
4
<PAGE> 7
(d) the reliance on, or the carrying out by the Transfer Agent
or its agents or subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio; provided such actions are taken in good
faith and without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 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.
6.03 At any time the Transfer Agent may apply to any officer of
the Fund for instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed by the
Transfer Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Transfer Agent shall be protected and indemnified in acting upon 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.
6.04 In the event either such 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.
6.05 Neither the Fund nor the Transfer Agent 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.
6.06 In order that the indemnification provisions contained in
this Article 6 shall apply, upon the assertion of a claim for which either the
Fund or the Transfer Agent 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.
5
<PAGE> 8
ARTICLE 7
COVENANTS OF THE FUND AND THE TRANSFER AGENT
7.01 The Fund shall, upon request, on behalf of each of the
Portfolios promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of
Directors of the Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) a copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.
7.02 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.
7.03 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.
7.04 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 8
TERMINATION OF AGREEMENT
8.01 This Agreement may be terminated by either the Fund or the
Transfer Agent upon sixty (60) days written notice to the other.
8.02 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 AIM on behalf of the applicable Portfolios.
Additionally, the Transfer Agent reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees.
8.03 AIM may terminate its obligations under this Agreement upon
sixty (60) days written notice to the Fund and to the Transfer Agent.
6
<PAGE> 9
ARTICLE 9
ADDITIONAL PORTFOLIOS
9.01 In the event that the Fund establishes one or more series
of Shares in addition to the Portfolios with respect to which it desires to
have the Transfer Agent render services as transfer agent under the terms
hereof, it shall so notify the Transfer Agent in writing, and if the Transfer
Agent agrees in writing to provide such services, such series of Shares shall
become a Portfolio hereunder.
ARTICLE 10
ASSIGNMENT
10.01 Except as provided in Section 10.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by any party
without the written consent of the other parties.
10.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
10.03 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 11
AMENDMENT
11.01 This Agreement may be amended or modified by a written
agreement executed by all parties and authorized or approved by a resolution of
the Board of Directors of the Fund.
ARTICLE 12
TEXAS LAW TO APPLY
12.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Texas.
ARTICLE 13
MERGER OF AGREEMENT
13.01 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 14
COUNTERPARTS
14.01 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 ADVISOR FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
-------------------------------
President
ATTEST:
/s/ OFELIA M. MAYO
- ------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:/s/ JOHN CALDWELL
-------------------------------
President
ATTEST:
/s/ NANCY L. MARTIN
- ------------------------------
Assistant Secretary
Solely With Respect to Article 2,
Paragraph 8.02 and Paragraph 8.03
and the Fee Schedule
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
-------------------------------
President
ATTEST:
/s/ DAVID L. KITE
- ------------------------------
Assistant Secretary
8
<PAGE> 11
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, A I M
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $ .70 per shareholder
account that is closed during any monthly period. Both fees shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12
of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ----------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividend 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65
</TABLE>
2. The Transfer Agent shall provide AIM with an annualized credit to the
monthly billings of (a) $1.50 for each open account in excess of 100,000
open Funds Accounts up to and including 125,000 open Funds Accounts; (b)
$1.75 for each open account in excess of 125,000 open Funds Accounts up
to and including 150,000 open Funds Accounts; (c) $2.00 for each open
Funds Account in excess of 150,000 open Funds Accounts up to and including
200,000 open Funds Accounts; (d) $2.25 for each open Funds Accounts in
excess of 200,000 open Funds Accounts up to and including 500,000 open
Funds Accounts; (e) $2.50 for each open Funds Account in excess of 500,000
open Funds Accounts up to and including 1,000,000 open Funds Accounts;
and (f) $3.00 for each open Funds Account in excess of 1,000,000 open
Funds Accounts.
3. In addition, on January 1 of the years 1998, 1999 and 2000 the Remote
Services Fee pursuant to the Remote Services Agreement with First Data
Investor Services Group, Inc. (formerly,The Shareholder Services Group,
Inc.), may be increased by First Data in an amount equal to the lesser of
the cumulative percentage increase in the then current Consumer Price
Index (for All Urban Consumers) or its successor index, or 7% of the
Remote Services Fees charged to the Fund for the preceding twelve (12)
month period.
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.
9
<PAGE> 12
Remote Services Fee The annualized fee per
shareholder account payable
monthly is:
- $3.60/per open account
for the first 1.5
million open accounts
- $2.25/per open account
for any open accounts in
excess of 1.5 million
- $1.80/per closed account.
5. OUT-OF-POCKET EXPENSES
A I M shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
<TABLE>
<S> <C>
- 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, barcoding, first class, forwarding) 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
- Checkwriting fee of $.75 per check redemption.
</TABLE>
A I M agrees that postage and mailing expenses will be paid on the day of
or prior to mailing. In addition, A I M will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever A I M and the Transfer Agent mutually
10
<PAGE> 13
agree that such expenses are not otherwise properly borne by the Transfer
Agent as part of its duties and obligations under the Agreement.
11
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Schedule A to be dated as
of this 4th day of August, 1997. .
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
President
A I M Fund Services, Inc.
By: /s/ JOHN CALDWELL
--------------------------------
John Caldwell
President
12
<PAGE> 1
EXHIBIT 10
[BALLARD SPAHR ANDREWS & INGERSOLL LETTERHEAD]
December 22, 1997
AIM Advisor Funds, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
Re: Investment Company Act File No. 811-3886
Gentlemen:
We have acted as counsel to AIM Advisor Funds, Inc. (the
"Company"), a corporation organized under the laws of the State of Maryland and
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 ("1940 Act") as an open-end series management investment
company.
This opinion is given in connection with the filing by the
Company of Post-Effective Amendment No. 33 to its Registration Statement on
Form N-1A ("Registration Statement") under the Securities Act of 1933 and
Amendment No. 34 under the 1940 Act relating to the registration of an
indefinite number of Class A, Class B and Class C shares of common stock, par
value $.001 per share (the "Shares"), representing interests in the AIM Advisor
Flex Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value
Fund, AIM Advisor MultiFlex Fund and AIM Advisor Real Estate Fund series
portfolios of the Company.
In connection with our giving this opinion, we have examined a
copy of the Charter of the Company, and originals or copies, certified or
otherwise identified to our satisfaction, of such other documents, corporate
records and other instruments as we have deemed necessary or advisable for
purposes of this opinion. We have also examined the prospectus included in the
Registration Statement substantially in the form in which it is to become
effective (the "Prospectus"). As to various questions of fact material to our
opinion, we have relied upon information provided by officers of the Company.
<PAGE> 2
AIM Advisor Funds, Inc.
December 22, 1997
Page 2
Based on the foregoing, we are of the opinion that the Shares
to be offered for sale pursuant to the Prospectus are, to the extent of the
number of Shares authorized to be issued by the Company in its Charter, duly
authorized and, when sold, issued and paid for as described in the Prospectus,
will have been legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the caption
"General Information - Legal Counsel" in the Prospectus included in the
Registration Statement.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to us under the heading "Financial
Highlights" in the Prospectus constituting part of this Post-Effective Amendment
No. 33 to the Registration Statement on Form N-1A (the "Registration Statement")
of the INVESCO Advisor Equity Fund (now known as AIM Advisor Large Cap Value
Fund), INVESCO Advisor Flex Fund (now known as AIM Advisor Flex Fund), INVESCO
Advisor MultiFlex Fund (now known as AIM Advisor MultiFlex Fund), INVESCO
Advisor Real Estate Fund (now known as AIM Advisor Real Estate Fund) and INVESCO
Advisor International Value Fund (now known as AIM Advisor International Value
Fund), constituting INVESCO Advisor Funds, Inc., now known as AIM Advisor Funds,
Inc. We also consent to the reference to us under the heading "Independent
Accountants" in the Statement of Additional Information constituting part of
this Post-Effective Amendment.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, CO
December 29, 1997
<PAGE> 1
EXHIBIT 15(b)
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT by and between AIM Advisor Funds, Inc., a Maryland
corporation (formerly, INVESCO Advisor Funds, Inc., hereinafter called the
"Company") and A I M Distributors, Inc., a Delaware corporation ("AIM
Distributors").
WHEREAS, the Company engages in business as an open-end management
investment company and is registered as such under the Act; and
WHEREAS, the Company desires to finance the distribution of the shares
of certain of its Series (the AIM Advisor Large Cap Value Fund, the AIM Advisor
Income Fund, the AIM Advisor Flex Fund, the AIM Advisor MultiFlex Fund, the AIM
Advisor Real Estate Fund, and the AIM Advisor International Value Fund;
collectively, the "Funds") in accordance with this Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Act (the "Plan and Agreement");
and
WHEREAS, AIM Distributors desires to be retained to perform services
in accordance with such Plan and Agreement and on said terms and conditions;
and
WHEREAS, this Plan and Agreement has been approved by a vote of the
board of directors of the Company, including a majority of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting on this
Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein
and the Company and AIM Distributors hereby enter into this Agreement pursuant
to the Plan in accordance with the requirements of Rule 12b-1 under the Act,
and provide and agree as follows:
1. The Plan is defined as those provisions of this document by
which the Company adopts a Plan pursuant to Rule 12b-1 under the Act and
authorizes payments as described herein. The Agreement is defined as those
provisions of this document by which the Company retains AIM Distributors to
provide distribution services beyond those required by the general Distribution
Agreement between the parties, as are described herein. The Company may retain
the Plan notwithstanding termination of the Agreement. Termination of the Plan
with respect to one or more Funds or classes will automatically terminate the
Agreement with respect to those Funds or classes. Each Fund is hereby
authorized to utilize the assets of its classes to finance certain activities
in connection with distribution of shares of the respective classes.
2. Subject to the supervision of the board of directors, the
Company hereby retains AIM Distributors to promote the distribution of the
shares of each of the classes of the Funds by providing services and engaging
in activities beyond those specifically required by the Distribution Agreement
between the Company and AIM Distributors and to provide related services. The
activities and services to be provided by AIM Distributors hereunder shall
include one or more of the following: (a) the payment of compensation
(including trail commissions and incentive compensation) to investment
advisers, securities dealers, financial institutions and other organizations
which render account maintenance or distribution services or marketing
assistance in connection with the distribution of the shares of each of the
Funds; (b) the payment of a service, support or similar fee to investment
advisers, securities dealers, financial institutions and other organizations
which render ongoing account maintenance services in connection with the
distribution of the shares of each of the Funds; (c) the printing and
distribution of statements of additional information, and prospectuses for the
use of potential investors in each Fund; (d) preparing, printing and
distributing sales literature; (e) the providing of advertising and engaging in
<PAGE> 2
other promotional activities, including direct mail solicitation, television,
radio, newspaper and other mediums of advertisement; (f) the costs associated
with conducting educational conferences and promotional meetings with
representatives of investment advisers, securities dealers, financial
institutions and other organizations at which marketing of the Fund is
discussed; and (g) such other services and activities as may from time to time
be agreed upon by the board of directors of the Company. With respect to
paragraphs 2(d), 2(e), and 2(f) above, AIM Distributors shall be entitled to
use Plan and Agreement payments to offset its overhead expenses which involve
the costs of AIM Distributors' personnel whose primary responsibilities involve
marketing of the Funds.
3. AIM Distributors hereby undertakes to use its best efforts to
promote sales of shares of each of the Funds to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and as it from
time to time believes will best further sales of such shares.
4a. With respect to its Class A shares, each Fund, except the AIM
Advisor Income Fund, shall pay AIM Distributors out of its assets attributable
to Class A shares, on a monthly basis, an amount computed at an annual rate of
.35 of 1% of the average daily net assets of Class A shares of the Fund during
the month, all of which amount must, in the discretion of AIM Distributors,
either be used by AIM Distributors to provide the Fund with the marketing
activities and distribution services specified in paragraph (2) above, or
returned to the Fund. The AIM Advisor Income Fund shall pay AIM Distributors
out of its assets attributable to Class A shares, on a monthly basis, an amount
computed at a rate of .25 of 1% of the average daily net assets of Class A
shares of the Fund during the month. Of such amount, up to .25 of 1% of the
average annual daily net assets of Class A shares may, in the discretion of AIM
Distributors, be used by AIM Distributors to pay the service, support, or
similar fees specified in paragraph 2(b) above. No payments will be made by a
Fund after the date of termination of the Plan and Agreement with respect to
Class A shares.
4b. With respect to its Class C shares, each Fund, except the AIM
Advisor Income Fund, shall pay AIM Distributors out of its assets attributable
to Class C shares, on a monthly basis, an amount computed at an annual rate of
.75 of 1% of the average daily net assets of Class C shares of the Fund during
the month, all of which amount must, in the discretion of AIM Distributors,
either be used by AIM Distributors to provide the Funds with the marketing
activities and distribution services specified in paragraph (2) above,
including using such payments to offset advanced commission payments that have
been paid to broker-dealers for sale of Class C shares of the Fund, or returned
to the Fund. With respect to its Class C shares, the AIM Advisor Income Fund
shall pay AIM Distributors out of its assets attributable to Class C shares, on
a monthly basis, an amount computed at an annual rate of .35 of 1% of the
average daily net assets of the Class C shares of the Fund during the month,
all of which amount must, in the discretion of AIM Distributors, either be used
by AIM Distributors to provide the Fund with the marketing activities and
distribution services specified in paragraph (2) above, including using such
payments to offset advanced commission payments that have been paid to
broker-dealers for sale of Class C shares of the Fund, or returned to the Fund.
In addition, each Fund shall pay AIM Distributors out of its assets, on a
monthly basis, an amount computed at an annual rate of .25 of 1% of the average
daily net assets of the Fund during the month, all of which amount must, in the
discretion of AIM Distributors, either be used by AIM Distributors to pay the
service, support, or similar fee specified in paragraph 2(b) above, or returned
to the Fund. No payments will be made by a Fund hereunder after the date of
termination of the Plan and Agreement with respect to Class C shares.
2
<PAGE> 3
5. To the extent that expenditures made by AIM Distributors out
of its own resources to finance any activity primarily intended to result in
the sale of shares of a Fund, pursuant to this Plan and Agreement or otherwise,
may be deemed to constitute the indirect use of Fund assets, such indirect use
of Fund assets is hereby authorized in addition to any other payments
authorized under this Plan and Agreement.
6. AIM Distributors shall provide to the board of directors of
the Company at least quarterly a written report of all moneys spent by it
pursuant to the Plan and Agreement with respect to each class, and the
activities and services specified in paragraph 2(b) above for which such moneys
were spent. Upon request, but no less frequently than annually, AIM
Distributors shall provide to the board of directors of the Company such
information as may reasonably be required for it to review the continuing
appropriateness of the Plan and Agreement.
7. This Plan and Agreement shall each become effective as of the
date so written herein, and shall each continue in effect for a period of one
year from such date unless terminated as provided below. Thereafter, the Plan
and Agreement shall continue in effect from year to year with respect to each
class, provided that the continuance of each is approved at least annually by a
vote of the board of directors of the Company, including a majority of the
Disinterested Directors, cast in person at a meeting called for the purpose of
voting on such continuance. The Plan may be terminated at any time as to any
Fund or any class, without penalty, by the vote of a majority of the
Disinterested Directors or by the vote of a majority of the outstanding voting
securities of the Fund and/or class, as applicable and as required by
applicable law, regulation and regulatory policy. AIM Distributors, or the
Company, by vote of a majority of the Disinterested Directors or of the holders
of a majority of the outstanding voting securities of any Fund or class as
applicable and as required by applicable law, regulation or regulatory policy,
may terminate the Agreement under this Plan as to such Fund or class, without
penalty, upon 30 days' written notice to the other party. In the event that
neither AIM Distributors nor any affiliate of AIM Distributors serves the
Company as investment adviser, the Agreement with AIM Distributors pursuant to
this Plan shall terminate at such time. The board of directors may determine
to approve a continuance of the Plan, without a continuance of the Agreement,
hereunder.
8. So long as the Plan remains in effect, the selection and
nomination of persons to serve as directors of the Company who are not
"interested persons" of the Company shall be committed to the discretion of the
directors then in office who are not "interested persons" of the Company.
However, nothing contained herein shall prevent the participation of other
persons in the selection and nomination process; provided that a final decision
on any such selection or nomination is within the discretion of, and approved
by, a majority of the directors of the Company then in office who are not
"interested persons" of the Company.
9. This Plan may not be amended to increase materially the amount
to be spent by any class hereunder without approval of shareholders of such
class. All material amendments to the Plan and to the Agreement must be
approved by the vote of the board of directors of the Company, including a
majority of the Disinterested Directors, cast in person at a meeting called for
the purpose of voting on such amendment.
10. To the extent that this Plan and Agreement constitutes a Plan
of Distribution adopted pursuant to Rule 12b-1 under the Act, it shall remain
in effect as such, so as to authorize the use by each Fund of the assets of its
classes in the amounts and for the purposes set forth herein, notwithstanding
the occurrence of an "assignment," as defined by the Act and the rules
thereunder.
3
<PAGE> 4
To the extent it constitutes an Agreement with AIM Distributors pursuant to a
Plan it shall terminate automatically in the event of such "assignment." Upon
a termination of the Agreement with AIM Distributors with respect to the Funds,
a Fund or a class, the Fund(s) may continue to make payments pursuant to the
Plan with respect to such Fund(s) or class only upon the approval of a new
Agreement with respect to such Fund(s) or class under this Plan and Agreement,
which may or may not be with AIM Distributors, or the adoption of other
arrangements regarding the use of the amounts authorized to be paid by such
Fund(s) or class hereunder, by the Company's board of directors in accordance
with the procedures set forth in paragraph 7 above.
11. The Company shall preserve copies of this Plan and Agreement,
together with minutes of all board of directors' meetings at which the
adoption, amendment or continuance of the Plan were considered (describing the
factors considered and the basis for decision), for a period of not less than
six years from the date of this Plan and Agreement, or of any such reports or
minutes, as the case may be, the first two years in an easily accessible place.
12. This Plan and Agreement shall be construed in accordance with
the laws of the State of Texas and applicable provisions of the Act. To the
extent the applicable law of the State of Texas, or any provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Plan and Agreement as of this 4th day of August, 1997.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
--------------------------- ---------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
ATTEST: /s/ STEPHEN I. WINER By: /s/ MICHAEL J. CEMO
--------------------------- ---------------------------------
Assistant Secretary President
4
<PAGE> 1
EXHIBIT 15(c)
MASTER DISTRIBUTION PLAN
OF
AIM ADVISOR FUNDS, INC.
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM Advisor Funds, Inc. (the "Fund"), on behalf of
the series of common stock set forth in Schedule A to this plan (the
"Portfolios"), may pay for distribution of the Class B Shares of such
Portfolios (the "Shares") which the Fund issues from time to time, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according
to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses for and pay any
institution selected to act as the Fund's agent for distribution of the Shares
of any Portfolio from time to time (each, a "Distributor") at the rates set
forth on Schedule A hereto based on the average daily net assets of each class
of Shares subject to any applicable limitations imposed by the Conduct Rules of
the National Association of Securities Dealers, Inc. in effect from time to
time (the "Conduct Rules"). All such payments are the legal obligation of the
Fund and not of any Distributor or its designee.
SECTION 3.
(a) 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 and
running advertising programs, payment of 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, payment of overhead
and 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, which may be established by
each Distributor in accordance with Section 4, the costs of
administering the Plan. To the extent that amounts paid
hereunder are not used specifically to reimburse the
Distributor for any such expense, such amounts may be treated
as compensation for the Distributor's distribution-related
services. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund
has suspended or otherwise limited sales.
(b) Subject to the provisions of Sections 8 and 9
hereof, amounts payable pursuant to Section 2 in respect of
Shares of each Portfolio shall be paid by the Fund to the
Distributor in respect of such Shares or, if more than one
institution has acted or is acting as Distributor in respect
of such Shares, then amounts payable pursuant to Section 2 in
respect of such Shares shall be paid to each such Distributor
in proportion to the number of such Shares sold by or
attributable to such Distributor's distribution efforts in
respect of such Shares in accordance with allocation
provisions of each Distributor's distribution agreement (the
"Distributor's
<PAGE> 2
12b-1 Share") notwithstanding that such Distributor's
distribution agreement with the Fund may have been terminated.
That portion of the amounts paid under the Plan that is not
paid or advanced by the Distributor 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.
(c) Any Distributor may assign, transfer or
pledge ("Transfer") to one or more designees (each an
"Assignee"), its rights to all or a designated portion of its
Distributor's 12b-1 Share from time to time (but not such
Distributor's duties and obligations pursuant hereto or
pursuant to any distribution agreement in effect from time to
time, if any, between such Distributor and the Fund), free and
clear of any offsets or claims the Fund may have against such
Distributor. Each such Assignee's ownership interest in a
Transfer of a specific designated portion of a Distributor's
12b-1 Share is hereafter referred to as an "Assignee's 12b-1
Portion." A Transfer pursuant to this Section 3(c) shall not
reduce or extinguish any claims of the Fund against the
Distributor.
(d) Each Distributor shall promptly notify the
Fund in writing of each such Transfer by providing the Fund
with the name and address of each such Assignee.
(e) A Distributor may direct the Fund to pay an
Assignee's 12b-1 Portion directly to such Assignee. In such
event, the Distributor shall provide the Fund with a monthly
calculation of the amount of (i) the Distributor's 12b-1
Share, and (ii) each Assignee's 12b-1 Portion, if any, for
such month (the "Monthly Calculation"). In such event, the
Fund shall, upon receipt of such notice and Monthly
Calculation from the Distributor, make all payments required
under such distribution agreement directly to the Assignee in
accordance with the information provided in such notice and
Monthly Calculation upon the same terms and conditions as if
such payments were to be paid to the Distributor.
(f) Alternatively, in connection with a Transfer,
a Distributor may direct the Fund to pay all of such
Distributor's 12b-1 Share from time to time to a depository or
collection agent designated by any Assignee, which depository
or collection agent may be delegated the duty of dividing such
Distributor's 12b-1 Share between the Assignee's 12b-1 Portion
and the balance of the Distributor's 12b-1 Share (such
balance, when distributed to the Distributor by the depository
or collection agent, the "Distributor's 12b-1 Portion"), in
which case only the Distributor's 12b-1 Portion may be subject
to offsets or claims the Fund may have against such
Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by the
Distributor of shareholder service arrangements with respect
to the Shares. The maximum service fee payable to any
provider of such shareholder service shall be twenty-five
one-hundredths of one percent (0.25%) per annum of the average
daily net assets of the Shares attributable to the customers
of such service provider. All such payments are the legal
obligation of the Fund and not of any Distributor or its
designee.
-2-
<PAGE> 3
(b) Pursuant to this Plan, the Distributor may
enter into agreements substantially in the form attached
hereto as Exhibit A ("Service Agreements") with such
broker-dealers ("Dealers") as may be selected from time to
time by the Distributor for the provision of continuing
shareholder services in connection with Shares held by such
Dealers' clients and customers ("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, some or all of 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 in any of several retirement plans
offered in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of Customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital
gains distributions automatically in Shares; (vi) performing
sub-accounting; (vii) providing periodic statements showing a
Customer's shareholder account balance and the integration of
such statements with those of other transactions and balances
in the Customer's account serviced by such institution; (viii)
forwarding applicable prospectuses, proxy statements, and
reports and notices to Customers who hold Shares; and (ix)
providing such other information and administrative services
as the Fund or the Customer may reasonably request.
(c) The Distributor may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with selected
banks and financial institutions acting in an agency capacity
for their customers ("Banks"). Banks acting in such capacity
will provide some or all of the shareholder services to their
customers as set forth in the Bank Agreements from time to
time.
(d) The Distributor may also enter into
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit C ("Bank Trust Department
Agreements and Brokers for Bank Trust Department Agreements")
with selected bank trust departments and brokers for bank
trust departments. Such bank trust departments and brokers
for bank trust departments will provide some or all of the
shareholder services to customers as set forth in the Bank
Trust Department Agreements and Brokers for Bank Trust
Department Agreements from time to time.
SECTION 5. This Plan shall not take effect until (i) it has
been approved, together with any related agreements, by votes of the majority
of both (a) the Board of Directors of the Fund, and (b) 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 Plan
or any agreements related to it (the "Dis-interested Directors"), cast in
person at a meeting called for the purpose of voting on this Plan or such
agreements, and (ii) the execution by the Fund and A I M Distributors, Inc. of
a Master Distribution Agreement in respect of the Shares.
SECTION 6. Unless sooner terminated pursuant to Section 8, this
Plan shall continue in effect until __________, 1999 and thereafter shall
continue in effect so long as such continuance is specifically approved, at
least annually, in the manner provided for approval of this Plan in Section 5.
- 3 -
<PAGE> 4
SECTION 7. Each Distributor 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 expended for distribution of the Shares and the
purposes for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the
Shares of any Portfolio at any time by vote of a majority of the Dis-interested
Directors, or by vote of a majority of outstanding Shares of such Portfolio.
Upon termination of this Plan with respect to any or all such Classes, the
obligation of the Fund to make payments pursuant to this Plan with respect to
such Classes shall terminate, and the Fund shall not be required to make
payments hereunder beyond such termination date with respect to expenses
incurred in connection with Shares sold prior to such termination date,
provided, in each case that each of the requirements of a Complete Termination
of this Plan in respect of such class, as defined below, are met. A
termination of this Plan with respect to any or all Shares of any or all
Portfolios shall not affect the obligation of the Fund to withhold and pay to
any Distributor contingent deferred sales charges to which such distributor is
entitled pursuant to any distribution agreement. For purposes of this Section
8 a "Complete Termination" of this Plan in respect of any Portfolio shall mean
a termination of this Plan in respect of such Portfolio, provided that: (i) the
Dis-interested Directors of the Fund shall have acted in good faith and shall
have determined that such termination is in the best interest of the Fund and
the shareholders of such Portfolio; (ii) and the Fund does not alter the terms
of the contingent deferred sales charges applicable to Shares outstanding at
the time of such termination; and (iii) unless the applicable Distributor at
the time of such termination was in material breach under the distribution
agreement in respect of such Portfolio, the Fund shall not, in respect of such
Portfolio, pay to any person or entity, other than such Distributor or its
designee, either the asset-based sales charge or the service fee (or any
similar fee) in respect of the Shares sold by such Distributor prior to such
termination.
SECTION 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with
respect to the Shares of any or all Portfolios at any time,
without payment of any penalty, by vote of a majority of the
Dis-interested Directors or by a vote of the majority of the
outstanding Shares of such Portfolio, 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; provided,
however, that, subject to the provisions of Section 8 hereof,
if such agreement is terminated for any reason, the obligation
of the Fund to make payments of (i) the Distributor's Share in
accordance with the directions of the Distributor pursuant to
Section 3(e) or (f) hereof if there exist Assignees for all or
any portion of such Distributor's 12b-1 Share, and (ii) the
remainder of such Distributor's 12b-1 Share to such
Distributor if there are no Assignees for such Distributor's
Share, pursuant to such agreement and this Plan will continue
with respect to the Shares until such Shares are redeemed or
automatically converted into another class of shares of the
Fund.
- 4 -
<PAGE> 5
SECTION 10. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved by a vote of at least a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Shares, and no material
amendment to the Plan shall be made unless approved in the manner provided for
in Section 5 hereof.
AIM ADVISOR FUNDS, INC.
(on behalf of its Class B Shares)
Attest: By:
--------------------------- -----------------------------
Assistant Secretary President
Effective as of ____________, 1998.
- 5 -
<PAGE> 6
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM ADVISOR FUNDS, INC.
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ----------------- ----------
<S> <C> <C> <C>
AIM Advisor Flex Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Advisor International Value Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Advisor Large Cap Value Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Advisor MultiFlex Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Advisor Real Estate Fund 0.75% 0.25% 1.00%
(Class B Shares)
</TABLE>
- 6 -
<PAGE> 1
EXHIBIT 15(d)
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
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 Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
7/97
<PAGE> 2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested 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 Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds 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.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 3, 1997
AIM Asian Growth Fund B Shares 0.25 November 3, 1997
AIM Asian Growth Fund C Shares 1.00** November 3, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 3, 1997
AIM European Development Fund B Shares 0.25 November 3, 1997
AIM European Development Fund C Shares 1.00** November 3, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
10/97
<PAGE> 4
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
10/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge,
as those terms are defined under the rules of the National Association of
Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
10/97
<PAGE> 1
EXHIBIT 15(e)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
7/97
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assignment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 3, 1997
AIM Asian Growth Fund B Shares 0.25 November 3, 1997
AIM Asian Growth Fund C Shares 1.00** November 3, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 3, 1997
AIM European Development Fund B Shares 0.25 November 3, 1997
AIM European Development Fund C Shares 1.00** November 3, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
10/97
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
10/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge,
as those terms are defined under the rules of the National Association of
Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
10/97
<PAGE> 1
EXHIBIT 15(f)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Contractholder Service Agreement (the
"Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant
to said Rule. This Agreement, being made between A I M Distributors, Inc.
("Distributors") and the authorized insurance company, sets forth the terms for
the provision of specialized services to holders of Group Annuity Contracts (the
"Contracts") issued by insurance company separate accounts to employers for
their pension, stock bonus or profit-sharing plans qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where
amounts contributed under such plans are invested pursuant to the Contracts in
shares of one or more of the series portfolios of the AIM - managed mutual funds
(or designated classes of such funds) (the "Fund(s)") listed in Appendix A,
attached hereto, which may be amended from time to time by Distributors.
Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of
Contracts who have selected the Fund(s) for purposes of their Group Annuity
Contracts ("Contractholders") you will receive payment pursuant to the
distribution plan adopted by each of the Funds. Such services to Group
Contractholders may include, without limitation, some or all of the
following: answering inquiries regarding the Fund(s); performing
sub-accounting for Contractholders; establishing and maintaining
Contractholder accounts and records; processing and bunching purchase and
redemption transactions; providing periodic statements of Contract account
balances; forwarding such reports and notices to Contractholders relative
to the Fund(s) as we deem necessary; generally, facilitating communications
with Contractholders concerning investments in the Fund(s) on behalf of
Plan participants; and performing such other administrative services as we
deem to be necessary or desirable, to the extent permitted by applicable
statute, rule or regulation. You represent that you will accept a fee
hereunder only so long as you continue to provide personal services to
Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your
name and you may exercise all applicable rights of a holder of such Shares.
You agree to transmit to the Funds, in a timely manner, all purchase orders
and redemption requests and to forward to each of your Contractholders as
you deem necessary, periodic shareholder reports and other communications
received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by you on behalf
of your Contractholders and accepted by the Funds (net of any redemption
orders placed by you on behalf of your Contractholders).
C-1
<PAGE> 2
4. You shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in your business, or all or
any personnel employed by you) as may be necessary or beneficial in
carrying out the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between
Distributors and you, neither you nor any of your employees or agents are
authorized to assist in the distribution of any shares of the Fund(s) to
the public or to make any representations to Contractholders concerning the
Fund(s) except those contained in the then current prospectus applicable to
the Fund(s). Neither the Funds, A I M Advisors, Inc. ("Advisors"),
Distributors nor any of their affiliates will be a party, nor will they be
represented as a party, to any Group Annuity Contract agreement between you
and the Contractholders nor shall the Funds, Advisors, Distributors or any
of their affiliates participate, directly or indirectly, in any
compensation that you may receive from Contractholders and their Plans'
participants.
6. In consideration of the services and facilities described herein,
you shall receive an annual fee, payable quarterly, as set forth in
Appendix A, of the aggregate average net asset value of shares of the
Fund(s) owned by you during each quarterly period for the benefit of
Contractholders' Plans' participants. You understand that this Agreement
and the payment of such distribution fees have been authorized and approved
by the Boards of Directors/Trustees of the Fund(s). You further understand
that this Agreement and the fees payable hereunder are subject to
limitations imposed by applicable rules of the National Association of
Securities Dealers, Inc.
7. The Funds reserve the right, at their discretion and without
notice, to suspend the sale of their shares or to withdraw the sale of
their shares.
8. This Agreement may be amended at any time without your consent by
mailing a copy of an amendment to you at the address set forth below. Such
amendment shall become effective on the date set forth in such amendment
unless you terminate this Agreement as set forth below within thirty (30)
days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than
60 days' written notice to you at your principal place of business. You may
terminate this Agreement on 60 days' written notice addressed to us at our
principal place of business. We may also terminate this Agreement for cause
on violation by you of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to you of
such termination. Our failure to terminate for any cause shall not
constitute a waiver of our right to terminate at a later date for any such
cause.
This Agreement may be terminated with respect to any Fund at any
time without payment of any penalty by the vote of a majority of the
directors/trustees of such Fund who are Disinterested Directors/Trustees,
as defined in the 1940 Act, 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 Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in the
1940 Act.
C-2
<PAGE> 3
10. All communications to us shall be sent to 11 Greenway Plaza, Suite
100, Houston, Texas 77046. Any notice to you shall be duly given if mailed,
telegraphed or sent by facsimile to you at the address shown on this
Agreement.
11. This Agreement shall become effective as of the date when it is
executed and dated below by us. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: ------------------------------------
Signature
------------------------------------
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date: ------------------------------------
(Firm Name)
------------------------------------
(Address)
------------------------------------
(City) / (State) / (County)
By: _______________________________
Name: _____________________________
Title: ____________________________
C-3
<PAGE> 4
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
Fund Fee Rate*
- ---- ---------
AIM Advisor Funds, Inc. (Class A Shares Only)
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
AIM Aggressive Growth Fund** .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A Shares Only)
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds (Class A Shares)
AIM Limited Maturity Treasury Fund .15%
*Frequency of Payments: Quarterly
**AIM Aggressive Growth Fund is currently closed to new investors.
C-4
<PAGE> 1
EXHIBIT 15(g)
EXHIBIT D
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BROKERS FOR BANK TRUST DEPARTMENTS)
_____________, 19___
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we shall
accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on behalf
of the Funds, agrees to pay all out-of- pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
<PAGE> 3
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause shall
not constitute a waiver of AIM Distributors's right to terminate at a
later date for any such cause. This Agreement may be terminated with
respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates the Selected
Dealer Agreement between us and AIM Distributors or a Fund's
Distribution Plan, and in any event, shall terminate automatically in
the event of its assignment by us, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors from
any obligations either may have under any other agreements between us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
----------------------------
Name:
------------------------------
Title:
----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Dated:
----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund **
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
- ---------
** Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BANK TRUST DEPARTMENTS)
_________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 7
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on
behalf of the Funds, agrees to pay all out-of- pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for
<PAGE> 8
Shareholder Service Agreement Page 3
(Bank Trust Departments)
any such cause. This Agreement may be terminated with respect to any
Fund at any time by the vote of a majority of the directors or trustees
of such Fund who are disinterested directors or by a vote of a majority
of the Fund's outstanding shares, on not less than 60 days' written
notice to us at our principal place of business. This Agreement will be
terminated by any act which terminates the Agreement for Purchase of
Shares of The AIM Family of Funds--Registered Trademark-- between us and
AIM Distributors or a Fund's Distribution Plan, and in any event, it
shall terminate automatically in the event of its assignment by us, the
term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM Family
of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
----------------------------------
(Firm Name)
----------------------------------
(Address)
----------------------------------
City/State/Zip/County
By:
---------------------------
Name:
-----------------------------
Title:
---------------------------
Dated:
----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Dated:
---------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund**
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
- ----------
** Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 18(b)
SECOND AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Second Amended and Restated Multiple Class Plan (the "Plan")
adopted in accordance with Rule 18f-3 under the Act shall govern the
terms and conditions under which the Funds may issue separate Classes
of Shares representing interests in one or more Portfolios of each
Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class
A Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class
B Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class
C Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor
to compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1
under the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in
a Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear
directly any and all Distribution Fees and/or Service Fees
payable by such Class pursuant to a Plan of Distribution
adopted by the Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency fees and
expenses and other shareholder recordkeeping fees and
expenses specifically attributable to that Class; provided,
however, that where two or more Classes of a Portfolio pay
such fees and/or expenses at the same rate or in the same
amount, those Classes shall bear proportionately such fees
and expenses based on the relative net assets attributable to
each such Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based
on the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - Except to the extent
provided in the following sentence, each Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class. Notwithstanding the foregoing, each Portfolio that
declares dividends on a daily basis will allocate income on
the basis of settled shares.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the
Portfolio may waive or reimburse the expenses of a particular
Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
2
<PAGE> 3
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
shares, for larger purchases, under a combined purchase
privilege, under a right of accumulation, under a letter of
intent or for certain categories of purchasers as permitted
by Rule 22(d) of the Act and as set forth in the Fund's
prospectus. Class A Shares that are not subject to a
front-end sales charge as a result of the foregoing shall be
subject to a CDSC for the CDSC Period set forth in
Section 5(a) of this Plan if so provided in the Fund's
prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with
Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to
ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
prospectus. Although AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Free Intermediate Shares
and shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM
Tax Exempt Cash Fund are not designated as "Class A", they
are substantially similar to Class A Shares as defined herein
and shall be deemed to be Class A Shares for the purposes of
this Plan.
b. Class B Shares. Class B Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (iii) subject to ongoing Service Fees
and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus, and (iv)
converted to Class A Shares eight years from the end of the
calendar month in which the shareholder's order to purchase
was accepted as set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(c), and (iii) subject to ongoing Service
Fees and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus.
d. Institutional Shares. Institutional Shares shall be (i)
offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time
to time by the Directors and as set forth in the Fund's
prospectus and (iii) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares and Class
C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be
18 months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares
shall be six years. The CDSC Rate for the Class B Shares
shall be as set forth in the Fund's prospectus, the relevant
portions of which are incorporated herein by this reference.
3
<PAGE> 4
c. Class C Shares. The CDSC Period for the Class C Shares shall
be one year. The CDSC Rate for the Class C Shares shall be as
set forth in the Fund's prospectus, the relevant portions of
which are incorporated herein by reference.
d. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value
or the cost of the Shares being redeemed. No sales charge
shall be imposed on increases in the net asset value of the
Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor
in accordance with the provisions of Rule 6c-10 under the
Act.
e. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10
under the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any
other Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC
shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service Fees
and Distribution Fees shall be governed by the Plan of Distribution
adopted by the Fund with respect to such fees and Rule 12b-1 of the
Act.
4
<PAGE> 5
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to
Class A Shares, a proportionate number of Shares held in the
sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative
net asset values of the two Classes without the imposition of
any sales load or other charge.
c. Amendments to Plan of Distribution for Class A Shares - If
any amendment is proposed to the Plan of Distribution under
which Service Fees and Distribution Fees are paid with
respect to Class A Shares of a Fund that would increase
materially the amount to be borne by those Class A Shares,
then no Class B Shares shall convert into Class A Shares of
that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of
such Class B Shares do not approve the proposed amendment,
the Directors of the Fund and the Distributor shall take such
action as is necessary to ensure that the Class voting
against the amendment shall convert into another Class
identical in all material respects to Class A Shares of the
Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
