<PAGE> 1
As filed with the Securities and Exchange Commission on April 24, 2000
1933 Act. Reg. No. 2-87377
1940 Act Reg. No. 811-3886
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
----- ---
Post-Effective Amendment No. 37 X
----- ---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 38 X
------ ---
AIM 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)
-------------------
Copies to:
Ofelia M. Mayo, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
-------------------
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 (b)
- ---
X on May 1, 2000, pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)(1)
- ---
on (date), pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2) of rule 485.
- ---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- --- previously filed post-effective amendment.
Title of Securities Being Registered: Common Stock
<PAGE> 2
AIM ADVISOR FLEX FUND
- --------------------------------------------------------------------------------
AIM Advisor Flex Fund seeks to achieve a high total return on investment
through growth of capital and current income, without regard to federal
income tax considerations.
AIM --Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 3
---------------------
AIM ADVISOR FLEX FUND
---------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-7
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM
Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
---------------------
AIM ADVISOR FLEX FUND
---------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high total return on investment
through growth of capital and current income, without regard to federal income
tax considerations.
The fund seeks to meet its objective by investing in a combination of equity
securities and fixed- and variable-income securities. The fund normally invests
at least 20% of its total assets in equity securities and at least 20% of its
total assets in fixed- and variable-income securities. The fund's equity
investments will consist primarily of common stocks, and to a lesser extent
convertible securities, of selected companies from a list of companies with
market capitalizations among the largest 800 publicly traded U.S. corporations.
The fund's fixed-income investments will consist primarily of U.S. government
obligations and corporate obligations that have been rated investment-grade, or
securities deemed by the portfolio managers to be of comparable quality.
The fund may invest in mortgage-backed securities, including mortgage
pass-through securities and collateralized mortgage obligations, that are
guaranteed as to timely payment of principal and interest by an agency of the
U.S. government or a private issuer. The fund may invest up to 10% of its total
assets in non-Canadian foreign securities and unsponsored American Depositary
Receipts (ADRs). The fund may also invest up to 25% of its total assets in
securities of Canadian issuers and sponsored ADRs.
The portion of the fund's assets that can be invested in either equity
securities or income securities will be allocated according to the portfolio
managers' assessment of current business, economic and market conditions. The
fund seeks reasonably consistent returns over a variety of market cycles. In
order to identify the equity securities having the best relative values, the
portfolio managers start with a list of the 800 largest publicly traded U.S.
corporations, which they reduce to a list of 100 eligible stocks by utilizing a
proprietary database system and fundamental analysis. The portfolio managers
usually sell a particular equity security when it no longer qualifies for the
list of eligible securities. The portfolio managers will purchase fixed- and
variable-income obligations that they believe are undervalued and may offer
superior yields. The portfolio managers consider whether to sell a particular
income security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from the fund may vary. The value of
your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity.
Debt securities are particularly vulnerable to credit risk and interest rate
fluctuations. Interest rate increases can cause the price of a debt security to
decrease. The longer a debt security's duration, the more sensitive it is to
this risk. The issuer of a security may default or otherwise be unable to honor
a financial obligation. A faster than expected principal prepayment rate on U.S.
Government agency mortgage-backed securities will reduce both the market value
of, and income from, such securities.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 5
---------------------
AIM ADVISOR FLEX FUND
---------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class C
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... -1.68%
1991 ....................................... 24.80%
1992 ....................................... 7.72%
1993 ....................................... 10.48%
1994 ....................................... 0.64%
1995 ....................................... 27.30%
1996 ....................................... 13.61%
1997 ....................................... 23.64%
1998 ....................................... 12.41%
1999 ....................................... -1.56%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
12.12% (quarter ended March 31, 1991) and the lowest quarterly return was -9.19%
(quarter ended September 30, 1999).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended
December 31, 1999) 1 YEAR 5 YEARS
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Class A -6.32% --
Class B -5.89% --
Class C -2.44% 14.63%
S&P 500(1) 21.03% 28.54%
- --------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A -- 9.76% 12/31/96
Class B -- 1.22% 03/03/98
Class C 11.27% 11.23% 02/24/88
S&P 500(1) 18.19% 18.55%(2) 02/29/88(2)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 6
---------------------
AIM ADVISOR FLEX FUND
---------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -----------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other(2) 0.13 0.11 0.11
Total Annual Fund
Operating Expenses 1.23 1.86 1.86
Fee Waiver(3) 0.10 0.00 0.00
Net Expenses 1.13% 1.86% 1.86%
- -----------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) Other expenses have been restated to reflect current agreements.
(3) The distributor has contractually agreed to limit the Class A shares' Rule
12b-1 distribution plan payments to 0.25%.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. Although your actual returns and costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $668 $919 $1,188 $1,957
Class B 689 885 1,206 2,015
Class C 289 585 1,006 2,180
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $668 $919 $1,188 $1,957
Class B 189 585 1,006 2,015
Class C 189 585 1,006 2,180
- ----------------------------------------------
</TABLE>
3
<PAGE> 7
---------------------
AIM ADVISOR FLEX FUND
---------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
manages the investment operations of the fund and has agreed to perform or
arrange for the performance of the fund's day-to-day management. The advisor is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO,
Inc. (the subadvisor), the fund's subadvisor, is located at 1315 Peachtree
Street, N.E., Atlanta, GA 30309. The subadvisor is responsible for the fund's
day-to-day management, including the fund's investment decisions and the
execution of securities transactions with respect to the fund.
The advisor has acted as an investment advisor since its organization in 1976,
and the subadvisor (formerly known as INVESCO Capital Management, Inc.) has
acted as an investment advisor since 1979. Today, the advisor, together with its
subsidiaries, advises or manages over 120 investment portfolios, including the
fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.75% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - James O. Baker, C.F.A., Senior Portfolio Manager, who has been responsible for
the fund and has been associated with the subadvisor and/or its affiliates
since 1992.
- - David S. Griffin, C.F.A., Assistant Portfolio Manager, who has been
responsible for the fund since 1993 and has been associated with the
subadvisor and/or its affiliates since 1991.
- - Margaret (Peg) Durkes Hoogs, C.F.A., Assistant Portfolio Manager, who has been
responsible for the fund since 1997 and has been associated with the
subadvisor and/or its affiliates since 1993.
- - Edward C. Mitchell, Jr., C.F.A., Senior Portfolio Manager, who has been
responsible for the fund since 1988 and has been associated with the
subadvisor and/or its affiliates since 1979.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Advisor Flex Fund are subject to the maximum
5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, quarterly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term gains, if any, annually and short-term
capital gains, if any, quarterly.
4
<PAGE> 8
---------------------
AIM ADVISOR FLEX FUND
---------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The information for the fiscal years or periods ended since December 31, 1998,
has been audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request. Information for prior years was audited by other public accountants.
<TABLE>
<CAPTION>
CLASS A(a)
-------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------
1999 1998 1997(b)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63
Income from investment operations:
Net investment income 0.46 0.39 0.41
Net gains (losses) on securities (both realized and
unrealized) (0.68) 2.16 3.63
Total from investment operations (0.22) 2.55 4.04
Less distributions:
Dividends from net investment income (0.48) (0.39) (0.43)
Distributions from net realized gains (1.79) (1.84) (0.50)
Total distributions (2.27) (2.23) (0.93)
Net asset value, end of period $ 17.57 $ 20.06 $ 19.74
Total return(c) (0.85)% 13.26% 24.60%
- --------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $39,195 $46,286 $25,151
Ratio of expenses to average net assets(d) 1.13%(e) 1.23% 1.45%
Ratio of net investment income to average net assets(f) 2.30%(e) 1.99% 2.34%
Portfolio turnover rate 55% 34% 17%
- --------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.39%, 1.52% and 1.55% for 1999-1997.
(e) Ratios are based on average net asset of $45,548,558.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 2.04%, 1.70% and 2.24% for 1999-1997.
5
<PAGE> 9
---------------------
AIM ADVISOR FLEX FUND
---------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
- -------------------------------------------------------------------------------------------
MARCH 3,
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 20.06 $20.69
Income from investment operations:
Net investment income 0.31 0.22
Net gains (losses) on securities (both realized and
unrealized) (0.66) 1.22
Total from investment operations (0.35) 1.44
Less distributions:
Dividends from net investment income (0.33) (0.23)
Distributions from net realized gains (1.79) (1.84)
Total distributions (2.12) (2.07)
Net asset value, end of period $ 17.59 $20.06
Total return(a) (1.50)% 7.25%
- -------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $10,076 $3,592
Ratio of expenses to average net assets(b) 1.86%(c) 2.00%(d)
Ratio of net investment income to average net assets(e) 1.57%(c) 1.22%(d)
Portfolio turnover rate 55% 34%
- -------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and for periods less than
one year is not annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.02% and 2.19% (annualized) for 1999-1998.
(c) Ratios are based on average net assets of $9,130,498.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 1.41% and 1.03% (annualized) for 1999-1998.
<TABLE>
<CAPTION>
CLASS C(a)
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1999 1998 1997(b) 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63 $ 15.66 $ 12.63
Income from investment operations:
Net investment income 0.32 0.25 0.30 0.30 0.32
Net gains (losses) on securities (both
realized and unrealized) (0.68) 2.14 3.60 1.81 3.09
Total from investment operations (0.36) 2.39 3.90 2.11 3.41
Less distributions:
Dividends from net investment income (0.33) (0.23) (0.29) (0.29) (0.32)
Distributions from net realized gains (1.79) (1.84) (0.50) (0.85) (0.06)
Total distributions (2.12) (2.07) (0.79) (1.14) (0.38)
Net asset value, end of period $ 17.58 $ 20.06 $ 19.74 $ 16.63 $ 15.66
Total return(c) (1.56)% 12.41% 23.64% 13.61% 27.30%
- --------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $610,041 $670,256 $603,179 $489,918 $399,162
Ratio of expenses to average net assets(d) 1.86%(e) 2.00% 2.20% 2.26% 2.28%
Ratio of net investment income to average
net assets(f) 1.57%(e) 1.22% 1.59% 1.81% 2.28%
Portfolio turnover rate 55% 34% 17% 26% 5%
- --------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.02% and 2.19% for 1999-1998.
(e) Ratios are based on average net assets of $696,773,444.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 1.41% and 1.03% for 1999-1998.
6
<PAGE> 10
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 11
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 12
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 13
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 14
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 15
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 16
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 17
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 18
---------------------
AIM ADVISOR FLEX FUND
---------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services,
Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Advisor Flex Fund
SEC 1940 Act file number: 811-3886
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com FLX-PRO-1 INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 19
AIM ADVISOR
INTERNATIONAL VALUE FUND
--------------------------------------------------------------------------
AIM Advisor International Value Fund seeks to achieve a high total return
on investment through growth of capital and current income, without regard
to U.S. or foreign tax considerations.
PROSPECTUS AIM --Registered Trademark--
MAY 1, 2000,
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 20
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-7
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos, Invierta con Disciplina and
Design and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM
Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 21
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high total return on investment
through growth of capital and current income, without regard to U.S. or foreign
tax considerations.
The fund seeks to meet its objective by investing at least 65% of its total
assets in a diversified portfolio of foreign equity securities. The fund will
normally invest in the securities of companies located in at least four
different countries. The fund may invest up to 20% of its total assets in equity
securities of companies located in developing countries, i.e., those that are in
the initial stages of their industrial cycle. The fund may also invest up to 35%
of its total assets in investment-grade debt securities, or securities deemed by
the portfolio managers to be of comparable quality.
The portfolio managers compare the price of a stock to various factors
including 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. They focus on securities that they believe have the best
relative value and favorable prospects for continued growth. The fund's
portfolio managers consider whether to sell a particular security when any of
those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. In anticipation of or in response to adverse market conditions,
the fund may temporarily also invest all or a portion of its assets in the
securities of U.S. issuers. As a result, the fund may not achieve its investment
objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from the fund may vary. The value of
your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions, and market liquidity. Debt securities are
particularly vulnerable to credit risk and interest rate fluctutaions. Interest
rate increases can cause the price of a debt security to decrease. The longer a
debt security's duration, the more sensitive it is to this risk. The issuer of a
debt security may default or otherwise be unable to honor a financial
obligation.
The prices of foreign securities may be further affected by other factors,
including
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 22
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
-------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class C
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1996 ....................................... 20.99%
1997 ....................................... 12.98%
1998 ....................................... 10.38%
1999 ....................................... 21.64%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
18.48% (quarter ended December 31, 1999) and the lowest quarterly return was
- -16.70% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR INCEPTION DATE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 15.83% 13.60% 12/31/96
Class B 16.70% 10.34% 03/03/98
Class C 20.64% 16.53% 05/01/95
MSCI EAFE(1) 26.96% 12.47%(2) 04/30/95(2)
- ----------------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International Europe, Australasia and Far East
Index measures performance of global stock markets in 20 developed
countries.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 23
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is
less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other(2) 0.26 0.27 0.27
Total Annual Fund
Operating Expenses 1.61 2.27 2.27
Fee Waiver(3) 0.10 0.00 0.00
Net Expenses 1.51% 2.27% 2.27%
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) Other expenses have been restated to reflect current agreements.
(3) The distributor has contractually agreed to limit the Class A shares' Rule
12b-1 distribution plan payments to 0.25%.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. Although your actual returns and costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $705 $1,030 $1,378 $2,356
Class B 730 1,009 1,415 2,440
Class C 330 709 1,215 2,605
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $705 $1,030 $1,378 $2,356
Class B 230 709 1,215 2,440
Class C 230 709 1,215 2,605
- ----------------------------------------------
</TABLE>
3
<PAGE> 24
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
manages the investment operations of the fund and has agreed to perform or
arrange for the performance of the fund's day-to-day management. The advisor is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO
Global Asset Management Limited (the subadvisor), the fund's subadvisor, is
located at Cedar House, 12 Bermudian Rd., 3rd Floor, Hamilton, HM AX Bermuda.
The subadvisor is responsible for the fund's day-to-day management, including
the fund's investment decisions and the execution of securities transactions
with respect to the fund.
The advisor has acted as an investment advisor since its organization in 1976
and the subadvisor has acted as an investment advisor since 1995. Today, the
advisor, together with its subsidiaries, advises or manages over 120 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 1.00% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - W. Lindsay Davidson, Senior Portfolio Manager, who has been responsible for
the fund since 1995 and has been associated with the subadvisor and/or its
affiliates since 1984.
- - Michele T. Garren, C.F.A., Portfolio Manager, who has been responsible for the
fund and has been associated with the subadvisor and/or its affiliates since
1997. From 1993 to 1996 she was a Portfolio Manager with AIG Global Investment
Corp.
- - Erik B. Granade, C.F.A., Portfolio Manager, who has been responsible for the
fund since 1997 and has been associated with the subadvisor and/or its
affiliates since 1996. From 1994 to 1996 he was a portfolio manager at Cashman
Farrell & Associates.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Advisor International Value Fund are subject
to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY
I Initial Sales Charges" in the "Shareholder Information--Choosing a Share
Class" section of this prospectus. Purchases of Class B and Class C shares are
subject to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
4
<PAGE> 25
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The information for the fiscal years or periods ended since December 31, 1998,
has been audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request. Information for prior years was audited by other public accountants.
<TABLE>
<CAPTION>
CLASS A(a)
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1999 1998 1997(b)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 16.57 $ 14.99 $13.42
Income from investment operations:
Net investment income 0.13 0.09 0.17
Net gains on securities (both realized and
unrealized) 3.57 1.59 1.69
Total from investment operations 3.70 1.68 1.86
Less distributions:
Dividends from net investment income (0.28) (0.10) (0.07)
Distributions from net realized gains (0.07) -- (0.22)
Total distributions (0.35) (0.10) (0.29)
Net asset value, end of period $ 19.92 $ 16.57 $14.99
Total return(c) 22.54% 11.20% 13.84%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $31,412 $28,281 $8,444
Ratio of expenses to average net assets(d) 1.51%(e) 1.57% 1.71%
Ratio of net investment income to average net
assets(f) 0.71%(e) 0.84% 0.83%
Portfolio turnover rate 24% 9% 9%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.72%, 1.81% and 1.81% for 1999-1997.
(e) Ratios are based on average net asset of $27,054,104.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.50%, 0.60% and 0.73% for 1999-1997.
5
<PAGE> 26
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
---------------------------------------
YEAR ENDED MARCH 3,
DECEMBER 31, THROUGH DECEMBER 31,
1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $16.48 $16.21
Income from investment operations:
Net investment income (loss) (0.01) --
Net gains on securities (both realized and unrealized) 3.56 0.27
Total from investment operations 3.55 0.27
Less distributions:
Dividends from net investment income (0.15) --
Distributions from net realized gains (0.07) --
Total distributions (0.22) --
Net asset value, end of period $19.81 $16.48
Total return(a) 21.70% 1.67%
- -----------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $5,642 $4,289
Ratio of expenses to average net assets(b) 2.27%(c) 2.32%(d)
Ratio of net investment income (loss) to average net
assets(e) (0.05)%(c) 0.09%(d)
Portfolio turnover rate 24% 9%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.38% and 2.46% (annualized) for 1999-1998.
(c) Ratios are based on average net assets of $4,255,071.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.16)% and (0.05%) (annualized) for 1999-1998.
<TABLE>
<CAPTION>
CLASS C(a)
--------------------------------------------------------------
MAY 1,
YEAR ENDED DECEMBER 31, THROUGH
--------------------------------------------- DECEMBER 31,
1999(b) 1998 1997(b) 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.48 $ 14.93 $13.42 $ 11.13 $10.00
Income from investment operations:
Net investment income (loss) (0.01) -- 0.01 (0.01) --
Net gains on securities (both realized and
unrealized) 3.55 1.55 1.73 2.34 1.13
Total from investment operations 3.54 1.55 1.74 2.33 1.13
Less distributions:
Dividends from net investment income (0.15) -- (0.01) -- --
Distributions from net realized gains (0.07) -- (0.22) (0.04) --
Total distributions (0.22) -- (0.23) (0.04) --
Net asset value, end of period $ 19.80 $ 16.48 $14.93 $ 13.42 $11.13
Total return(c) 21.64% 10.38% 12.98% 20.99% 11.28%
- ------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $108,821 $105,083 $93,162 $51,916 $9,467
Ratio of expenses to average net assets(d) 2.27%(e) 2.32% 2.46% 2.50% 2.50%(f)
Ratio of net investment income (loss) to
average net assets(g) (0.05)%(e) 0.09% 0.08% (0.16)% 0.03%(f)
Portfolio turnover rate 24% 9% 9% 5% 2%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.38% and 2.46% for 1999-1998.
(e) Ratios are based on average net assets of $99,393,505.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.16)% and (0.05)% for 1999-1998.
6
<PAGE> 27
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 28
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 29
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 30
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 31
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 32
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 33
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 34
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 35
------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
------------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -------------------------------------
AIM Advisor International Value Fund
SEC 1940 Act file number: 811-3886
- -------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com IVAL-PRO-1 INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 36
AIM ADVISOR LARGE CAP
VALUE FUND
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
AIM Advisor Large Cap Value Fund seeks to achieve a high total return on
investment through growth of capital and current income, without regard to
federal income tax considerations.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
Effective April 28, 2000, the fund
is closed to new investors.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 37
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
TABLE OF CONTENTS
- ------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Reorganization of the Fund 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM
Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any person has been authorized to give any information
or to make any representations other than those contained in this prospectus,
and you should not rely on such other information or representations.
<PAGE> 38
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high total return on investment
through growth of capital and current income, without regard to federal income
tax considerations.
The fund seeks to meet its objective by investing, normally, at least 65% of
its investments in equity securities. These securities will consist principally
of common stocks, and to a lesser extent convertible securities, of selected
companies from a list of companies with market capitalizations among the largest
800 publicly traded U.S. corporations.
The fund may invest up to 10% of its total assets in non-Canadian foreign
securities and unsponsored American Depositary Receipts (ADRs). Up to 25% of the
fund's total assets may be invested in Canadian securities and sponsored ADRs.
In order to identify the securities having the best relative values, the
portfolio managers start with a list of securities of the 800 largest publicly
traded U.S. corporations, which they reduce to a list of 100 eligible securities
by utilizing a proprietary database system and fundamental analysis. The
portfolio managers consider whether to sell a particular security when it no
longer qualifies for the list of eligible securities.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from the fund may vary. The value of
your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPO's may
significantly increase the fund's total returns. As the fund's assets grow, the
impact of IPO investment will decline, which may reduce the fund's total return.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 39
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the fund's
investments in initial public offerings, which may have a magnified impact on
the fund due to its small asset base. There is no guarantee that, as the fund's
assets grow, it will continue to experience substantially similar performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class C
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990.................................... -3.75%
1991.................................... 33.59%
1992.................................... 4.84%
1993.................................... 9.16%
1994.................................... 2.70%
1995.................................... 30.28%
1996.................................... 17.17%
1997.................................... 30.66%
1998.................................... 13.15%
1999.................................... -0.71%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
17.83% (quarter ended December 31, 1998) and the lowest quarterly return was
- -15.27% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A -5.52% -- -- 12.37% 12/31/96
Class B -5.08% -- -- 1.26% 03/03/98
Class C -1.58% 17.51% 12.97% 13.59% 02/15/84
S&P 500(1) 21.03% 28.54% 18.19% 18.22%(2) 01/31/84(2)
- -----------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 40
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases (as a
percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
Distribution and/or
Service (12b-1) Fee 0.35 1.00 1.00
Other(2) 0.26 0.20 0.20
Total Annual Fund
Operating Expenses 1.36 1.95 1.95
Fee Waiver(3) 0.10 0.00 0.00
Net Expenses 1.26% 1.95% 1.95%
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) Other expenses have been restated to reflect current agreements.
(3) The distributor has contractually agreed to limit the Class A shares' Rule
12b-1 distribution plan payments to 0.25%.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. Although your actual returns and costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $681 $957 $1,254 $2,095
Class B 198 612 1,052 2,122
Class C 198 612 1,052 2,275
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $681 $957 $1,254 $2,095
Class B 198 612 1,052 2,122
Class C 198 612 1,052 2,275
- ----------------------------------------------
</TABLE>
3
<PAGE> 41
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
manages the investment operations of the fund and has agreed to perform or
arrange for the performance of the fund's day-to-day management. The advisor is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO,
Inc. (the subadvisor), the fund's subadvisor, is located at 1315 Peachtree
Street, N. E., Atlanta, GA 30309. The subadvisor is responsible for the fund's
day-to-day management, including the fund's investment decisions and the
execution of securities transactions with respect to the fund.
The advisor has acted as an investment advisor since its organization in 1976
and the subadvisor (formerly known as INVESCO Capital Management, Inc.) has
acted as an investment advisor since 1979. Today, the advisor, together with its
subsidiaries, advises or manages over 120 investment portfolios, including the
fund, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.75% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Michael C. Harhai, C.F.A., Senior Portfolio Manager, who has been responsible
for the fund since 1993 and has been associated with the subadvisor and/or
its affiliates since 1993.
- - R. Terrence Irrgang, C.F.A., Assistant Portfolio Manager, who has been
responsible for the fund since 1993 and has been associated with the
subadvisor and/or its affiliates since 1992.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Advisor Large Cap Value Fund are subject to
the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
REORGANIZATION OF THE FUND
The Board of Directors of AIM Advisor Funds, Inc. unanimously approved, on March
8, 2000, a plan of reorganization pursuant to which the fund would transfer
substantially all of its assets to AIM Basic Value Fund (Basic Value), a series
of AIM Growth Series. As a result of the transaction, shareholders of the fund
would receive shares of Basic Value in exchange for their shares of the fund and
the fund would cease operations. The investment objective of the fund is to
achieve a high total return on investment through growth of capital and current
income, without regard to federal income tax consequences. The investment
objective of Basic Value Fund is long-term growth of capital.
The plan requires the approval of fund shareholders and will be submitted to
the shareholders for their consideration at a meeting to be held in May 2000. If
the plan is approved by shareholders of the fund and certain conditions required
by the plan are satisfied, the transaction is expected to become effective
shortly thereafter.
4
<PAGE> 42
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The information for the fiscal years or periods ended since December 31, 1998,
has been audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request. Information for prior years was audited by other public accountants.
<TABLE>
<CAPTION>
CLASS A(a)
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998(b) 1997(b)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.20 $ 24.11 $20.57
Income from investment operations:
Net investment income 0.19 0.20 0.23
Net gains (losses) on securities (both realized and
unrealized) (0.30) 3.11 6.17
Total from investment operations (0.11) 3.31 6.40
Less distributions:
Dividends from net investment income (0.22) (0.12) (0.15)
Distributions from net realized gains (3.02) (2.10) (2.71)
Total distributions (3.24) (2.22) (2.86)
Net asset value, end of period $ 21.85 $ 25.20 $24.11
Total return(c) (0.01)% 14.07% 31.66%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $12,011 $15,684 $5,000
Ratio of expenses to average net assets(d) 1.26%(e) 1.30% 1.46%
Ratio of net investment income to average net assets(f) 0.70%(e) 0.91% 0.77%
Portfolio turnover rate 44% 52% 34%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges.
(d) After fee waivers and/or reimbursements. Ratios of expenses to average net
assets prior to fee waivers and/or reimbursement were 1.50%, 1.55% and 1.56%
for 1999-1997.
(e) Ratios are based on average net assets of $13,137,049.
(f) After fee waivers and/or reimbursements. Ratios of net investment income to
average net assets prior to fee waivers and/or reimbursement were 0.46%,
0.66% and 0.67% for 1999-1997.
5
<PAGE> 43
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
YEAR ENDED MARCH 3,
DECEMBER 31, THROUGH
1999 DECEMBER 31, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $25.06 $25.59
Income from investment operations:
Net investment income 0.01 0.02
Net gains (losses) on securities (both realized and
unrealized) (0.31) 1.57
Total from investment operations (0.30) 1.59
Less distributions:
Dividends from net investment income (0.04) (0.02)
Distributions from net realized gains (3.02) (2.10)
Total distributions (3.06) (2.12)
Net asset value, end of period $21.70 $25.06
Total return(a) (0.75)% 6.51%
- --------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $6,573 $7,325
Ratio of expenses to average net assets(b) 1.95%(c) 2.05%(d)
Ratio of net investment income to average net assets(e) 0.01%(c) 0.16%(d)
Portfolio turnover rate 44% 52%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) After fee waivers and/or reimbursements. Ratio of expenses to average net
assets prior to fee waivers and/or reimbursements were 2.09% and 2.20%
(annualized) for 1999-1998.
(c) Ratios are based on average net assets of $5,613,443.
(d) Annualized.
(e) After fee waivers and/or reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and/or reimbursement were
(0.13)% and 0.01% (annualized) for 1999-1998.
<TABLE>
<CAPTION>
CLASS C(a)
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997(B) 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.05 $ 24.08 $ 20.57 $ 17.60 $ 13.96
Income from investment operations:
Net investment income 0.01 0.04 0.01 0.05 0.10
Net gains (losses) on securities (both realized
and unrealized) (0.30) 3.05 6.21 2.97 4.11
Total from investment operations (0.29) 3.09 6.22 3.02 4.21
Less distributions:
Dividends from net investment income (0.04) (0.02) -- (0.05) (0.10)
Distributions from net realized gains (3.02) (2.10) (2.71) -- (0.47)
Total distributions (3.06) (2.12) (2.71) (0.05) (0.57)
Net asset value, end of period $ 21.70 $ 25.05 $ 24.08 $ 20.57 $ 17.60
Total return(c) (0.71)% 13.15% 30.66% 17.17% 30.28%
- ----------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $142,672 $182,679 $172,228 $137,416 $113,573
Ratio of expenses to average net assets(d) 1.95%(e) 2.05% 2.21% 2.26% 2.28%
Ratio of net investment income to average net
assets(f) 0.01%(e) 0.16% 0.02% 0.24% 0.64%
Portfolio turnover rate 44% 52% 34% 19% 17%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges.
(d) After fee waivers and/or reimbursements. Ratio of expenses to average net
assets prior to fee waivers and/or reimbursement were 2.09% and 2.20% for
1999-1998.
(e) Ratios are based on average net assets of $165,599,460.
(f) After fee waivers and/or reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and/or reimbursement were
(0.13)% and 0.01% for 1999-1998.
6
<PAGE> 44
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 45
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 46
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 47
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 48
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 49
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 50
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 51
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 52
--------------------------------
AIM ADVISOR LARGE CAP VALUE FUND
--------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ----------------------------------
AIM Advisor Large Cap Value Fund
SEC 1940 Act file number: 811-3886
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com LCV-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 53
AIM ADVISOR
REAL ESTATE FUND
------------------------------------------------------------------------
AIM Advisor Real Estate Fund seeks to achieve a high total return on
investment through growth of capital and current income, without regard to
federal income tax considerations.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and C
shares of the funds. Please read it
before investing and keep it for future
reference.
As with all other mutual fund securities,
the Securities and Exchange Commission
has not approved or disapproved these
securities or determined whether the
information in this prospectus is
adequate or accurate. Anyone who tells
you otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 54
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE
FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-7
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con
Disciplina and Invest with Discipline are registered service marks and AIM
Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM
Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 55
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high total return on investment
through growth of capital and current income, without regard to federal income
tax considerations.
The fund seeks to meet its objective by investing, normally, at least 65% of
its total assets in equity securities of companies that are principally engaged
in the real estate industry and are listed on a U.S. exchange or the National
Association of Securities Dealers Automated Quotation System (NASDAQ). The fund
considers a company to be "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 real estate investment trusts (REITs). The
fund will not invest directly in private real estate assets.
The fund may 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 or in securities of companies unrelated to the real
estate industry that the portfolio managers believe are undervalued and have
potential for growth of capital. The fund may invest up to 100% of its assets in
debt securities of companies related to the real estate industry. The fund will
limit its investment in debt securities to those that are investment-grade or
deemed by the fund's portfolio manager to be of comparable quality. The fund may
invest (1) up to 25% of its total assets in foreign securities and unsponsored
ADRs; and (2) in sponsored ADRs.
The portfolio managers utilize fundamental real estate analysis and numerical
securities analysis to select investments for the fund, including analyzing a
company's management and strategic focus, evaluating the location, physical
attributes and cash flow generating capacity of a company's properties and
calculating expected returns, among other things. The portfolio managers
consider whether to sell a particular security when any of those factors
materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity. Debt securities are
particularly vulnerable to credit risk and interest rate fluctuations. Interest
rate increases can cause the price of a debt security to decrease. The longer a
debt security's duration, the more sensitive it is to this risk. The issuer of a
debt security may default or otherwise be unable to honor a financial
obligation.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
Because the fund focuses its investments in companies related to the real
estate industry, the value of your shares may rise and fall more than the value
of shares of a fund that invests in a broader range of companies.
The fund could conceivably hold real estate directly if a company defaults on
debt securities the fund owns. In that event, an investment in the fund may have
additional risks relating to direct ownership in real estate, including
difficulties in valuing and trading real estate, declines in value of the
properties, risks relating to general and local economic conditions, changes in
the climate for real estate, increases in taxes, expenses and costs, changes in
laws, casualty and condemnation losses, rent control limitations and increases
in interest rates.
The value of the fund's investment in REITs is affected by the factors listed
above, as well as the management skill of the persons managing the REIT. REITs
also are not diversified and, therefore, their value may fluctuate more widely,
and they may be subject to greater risks, than if they invested more broadly.
Since REITs have expenses of their own, you will bear a proportionate share of
those expenses in addition to those of the fund.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 56
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class C
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1996 ....................................... 36.43%
1997 ....................................... 18.88%
1998 ....................................... -23.16%
1999 ....................................... -3.54%
</TABLE>
During the period shown in the bar chart, the highest quarterly return was
19.39% (quarter ended December 31, 1996) and the lowest quarterly return was
- -15.54% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR INCEPTION DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A -7.48% -4.96% 12/31/96
Class B -8.17% -15.54% 03/03/98
Class C -4.47% 5.99% 05/01/95
S&P 500(1) 21.03% 27.50%(2) 04/30/95(2)
- --------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 57
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -----------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.90% 0.90% 0.90%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other 0.48 0.47 0.47
Total Annual Fund
Operating Expenses 1.73 2.37 2.37
Fee Waiver(2) 0.12 0.02 0.02
Net Expenses 1.61% 2.35% 2.35%
- -----------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The distributor has contractually agreed to limit the Class A shares' Rule
12b-1 distribution plan payments to 0.25%. The advisor has contractually
agreed to limit Total Annual Operating Expenses, excluding management fees,
Rule 12b-1 distribution fees, interest expense and extraordinary items, to
0.45%.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. Although your actual returns and costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $642 $ 994 $1,369 $2,419
Class B 740 1,039 1,465 2,547
Class C 340 739 1,265 2,706
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $642 $994 $1,369 $2,419
Class B 240 739 1,265 2,547
Class C 240 739 1,265 2,706
- ----------------------------------------------
</TABLE>
3
<PAGE> 58
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
manages the investment operations of the fund and has agreed to perform or
arrange for the performance of the fund's day-to-day management. The advisor is
located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO,
Inc. (the subadvisor), the fund's subadvisor, is located at 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309. The subadvisor is responsible for the
fund's day-to-day management, including the fund's investment decisions and the
execution of securities transactions with respect to the fund.
The advisor has acted as an investment advisor since its organization in 1976
and the subadvisor has acted as an investment advisor and qualified professional
asset manager since 1979. Today, the advisor, together with its subsidiaries,
advises or manages over 120 investment portfolios, including the fund,
encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.90% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Mark Blackburn, Portfolio Manager, who has been responsible for the fund since
2000 and has been associated with the subadvisor and/or its affiliates since
1998. From 1995 to 1997, he was Senior Analyst and Associate Director of
Research for Southwest Securities.
- - Joe V. Rodriguez, Jr., Senior Portfolio Manager, who has been responsible for
the fund since 1995 and has been associated with the subadvisor and/or its
affiliates since 1990.
- - James W. Trowbridge, Senior Portfolio Manager, who has been responsible for
the fund since 1995 and has been associated with the subadvisor and/or its
affiliates since 1989.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Advisor Real Estate Fund are subject to the
maximum 4.75% initial sales charge as listed under the heading "CATEGORY II
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, quarterly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term gains, if any, annually and short-term
capital gains, if any, quarterly.
4
<PAGE> 59
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The information for the fiscal years or periods ended since December 31, 1998,
has been audited by KPMG LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request. Information for prior years was audited by other public accountants.
<TABLE>
<CAPTION>
CLASS A(a)
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998(b) 1997(b)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $14.19
Income from investment operations:
Net investment income 0.42 0.58 0.34
Net gains (losses) on securities (both realized and
unrealized) (0.75) (4.11) 2.39
Total from investment operations (0.33) (3.53) 2.73
Less distributions:
Dividends from net investment income (0.52) (0.50) (0.44)
Distributions from capital gains -- (0.25) (0.74)
Total distributions (0.52) (0.75) (1.18)
Net asset value, end of period $ 10.61 $ 11.46 $15.74
Total return(c) (2.88)% (22.54)% 19.78%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $16,279 $20,087 $16,507
Ratio of expenses to average net assets(d) 1.61%(e) 1.55% 1.60%
Ratio of net investment income to average net assets(f) 3.70%(e) 4.37% 3.26%
Portfolio turnover rate 52% 69% 57%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effective in the form of a 300% stock dividend, on November 7,
1997.
b) Calculated using average shares outstanding.
(c) Does not deduct sales charges.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.73%, 1.71% and 1.70% for 1999-1997.
(e) Ratios are based on average net assets of $18,904,818.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.58%, 4.21% and 3.16% for 1999-1997.
5
<PAGE> 60
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
MARCH 3,
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1999 1998(a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $11.48 $ 15.34
Income from investment operations:
Net investment income 0.32 0.37
Net gains (losses) on securities (both
realized and unrealized) (0.72) (3.58)
Total from investment operations (0.40) (3.21)
Less distributions:
Dividends from net investment income (0.44) (0.40)
Distributions from capital gains -- (0.25)
Total distributions (0.44) (0.65)
Net asset value, end of period $10.64 $ 11.48
Total return(b) (3.53)% (21.02)%
- ---------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $9,839 $ 6,901
Ratio of expenses to average net assets(c) 2.35%(d) 2.31%(e)
Ratio of net investment income to average net
assets(f) 2.96%(d) 3.62%(e)
Portfolio turnover rate 52% 69%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized
for periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.37 and 2.35% (annualized) for 1999-1998.
(d) Ratios are based on average net assets of $7,379,172.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 2.94% and 3.56% (annualized) for 1999-1998.
<TABLE>
<CAPTION>
CLASS C(a)
---------------------------------------------------------------
MAY 1,
YEAR ENDED DECEMBER 31, THROUGH
---------------------------------------- DECEMBER 31,
1999(b) 1998(b) 1997(b) 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $ 14.19 $ 10.76 $ 10.00
Income from investment operations:
Net investment income 0.33 0.50 0.36 0.33 0.16
Net gains (losses) on securities (both realized and
unrealized) (0.73) (4.13) 2.26 3.51 0.75
Total from investment operations (0.40) (3.63) 2.62 3.84 0.91
Less distributions:
Dividends from net investment income (0.44) (0.40) (0.33) (0.31) (0.15)
Distributions from capital gains -- (0.25) (0.74) (0.10) --
Total distributions (0.44) (0.65) (1.07) (0.41) (0.15)
Net asset value, end of period $ 10.62 $ 11.46 $ 15.74 $ 14.19 $ 10.76
Total return(c) (3.54)% (23.16)% 18.88% 36.43% 9.12%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $19,992 $32,921 $43,934 $20,566 $ 5,565
Ratio of expenses to average net assets(d) 2.35%(e) 2.31% 2.35% 2.40% 2.40%(f)
Ratio of net investment income (loss) to average net
assets(g) 2.96%(e) 3.62% 2.54% 3.21% 4.68%(f)
Portfolio turnover rate 52% 69% 57% 25% 7%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effective in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.37% and 2.37% for 1999-1998.
(e) Ratios are based on average net asset of $26,349,554.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 2.94% and 3.56% for 1999-1998.
6
<PAGE> 61
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 62
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 63
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THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 64
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 65
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 66
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 67
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 68
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 69
----------------------------
AIM ADVISOR REAL ESTATE FUND
----------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ------------------------------------
AIM Advisor Real Estate Fund
SEC 1940 Act file number: 811-3886
- ------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com REA-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 70
STATEMENT OF
ADDITIONAL INFORMATION
AIM ADVISOR FLEX FUND
AIM ADVISOR INTERNATIONAL VALUE FUND
AIM ADVISOR LARGE CAP VALUE 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, TX 77210-4739
OR BY CALLING (800) 347-4246
-------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2000,
RELATING TO THE AIM ADVISOR FLEX FUND PROSPECTUS DATED MAY 1, 2000,
THE AIM ADVISOR INTERNATIONAL VALUE FUND PROSPECTUS DATED MAY 1, 2000,
THE AIM ADVISOR LARGE CAP VALUE FUND PROSPECTUS DATED MAY 1, 2000,
AND THE AIM ADVISOR REAL ESTATE FUND DATED MAY 1, 2000
<PAGE> 71
TABLE OF CONTENTS
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PAGE
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INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE COMPANY.............................................................................1
The Company and its Shares...............................................................................1
ADDITIONAL INFORMATION ABOUT THE FUNDS............................................................................2
Large Cap Value Fund.....................................................................................2
Flex Fund................................................................................................2
Real Estate Fund.........................................................................................4
International Value Fund.................................................................................4
INVESTMENT STRATEGIES AND RISKS...................................................................................5
Convertible Securities...................................................................................5
Foreign Securities.......................................................................................5
Developing Countries.....................................................................................6
Options..................................................................................................7
Combined Option Positions................................................................................7
Futures Contracts........................................................................................8
Options on Futures Contracts.............................................................................9
Risks as to Futures Contracts and Related Options........................................................9
Forward Foreign Currency Exchange Contracts.............................................................10
Securities Issued on a When-Issued or Delayed Delivery Basis............................................10
Swap Agreements.........................................................................................11
Mortgage-Related Securities.............................................................................11
Risks of Mortgage-Related Securities....................................................................14
Real-Estate Industry Securities.........................................................................15
Repurchase Agreements...................................................................................16
Portfolio Turnover......................................................................................16
INVESTMENT RESTRICTIONS..........................................................................................16
PORTFOLIO SECURITIES LOANS.......................................................................................18
MANAGEMENT OF THE COMPANY........................................................................................18
Directors and Officers..................................................................................19
Remuneration of Directors...............................................................................22
AIM Funds Retirement Plan for Eligible Directors/Trustees...............................................24
THE ADVISORY AND SUB-ADVISORY AGREEMENTS.........................................................................25
OPERATING SERVICES AGREEMENT.....................................................................................27
ADMINISTRATIVE SERVICES AGREEMENT................................................................................28
DISTRIBUTION OF SHARES...........................................................................................28
THE DISTRIBUTOR..................................................................................................34
Sales Charges and Dealer Concessions....................................................................35
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................38
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<S> <C>
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................41
HOW TO PURCHASE AND REDEEM SHARES................................................................................43
Backup Withholding......................................................................................44
NET ASSET VALUE DETERMINATION....................................................................................46
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................47
Reinvestment of Dividends and Distributions.............................................................47
Tax Matters.............................................................................................47
Special Tax Information.................................................................................47
Qualification as a Regulated Investment Company.........................................................48
Determination of Taxable Income of a Regulated Investment Company.......................................48
Excise Tax on Regulated Investment Companies............................................................49
Swap Agreements.........................................................................................50
Investment in Passive Foreign Investment Companies......................................................50
Debt Securities Acquired at a Discount..................................................................51
Distributions...........................................................................................51
Disposition of Shares...................................................................................52
Other Taxation..........................................................................................52
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................52
General Brokerage Policy................................................................................52
Allocation of Portfolio Transactions....................................................................53
Section 28(e) Standards.................................................................................53
Brokerage Commissions Paid..............................................................................54
REDEMPTIONS......................................................................................................55
PERFORMANCE INFORMATION..........................................................................................55
SHAREHOLDER INFORMATION..........................................................................................59
MISCELLANEOUS INFORMATION........................................................................................61
Charges for Certain Account Information.................................................................61
Audit Reports...........................................................................................61
Legal Matters...........................................................................................61
Custodian and Transfer Agent............................................................................61
Principal Holders of Securities.........................................................................62
APPENDIX.........................................................................................................66
FINANCIAL STATEMENTS.............................................................................................FS
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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. The information for the
AIM ADVISOR FLEX FUND (formerly, INVESCO Advisor Flex Portfolio) (the "Flex
Fund") is included in a Prospectus dated May 1, 2000. The information for the
AIM ADVISOR INTERNATIONAL VALUE FUND (formerly, INVESCO Advisor International
Value Portfolio) (the "International Value Fund") is included in a Prospectus
dated May 1, 2000. The information for the AIM ADVISOR LARGE CAP VALUE FUND
(formerly, INVESCO Advisor Equity Portfolio) (the "Large Cap Value Fund") is
included in a Prospectus dated May 1, 2000. The information for the AIM
ADVISOR REAL ESTATE FUND (formerly, INVESCO Advisor Real Estate Portfolio) (the
"Real Estate Fund") is included in a Prospectus dated May 1, 2000. Additional
copies of the Prospectuses and 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 Prospectus, and in order to avoid repetition, reference
will be made to sections of the Prospectus. Additionally, the Prospectus and
this Statement of Additional Information omit certain information contained in
the 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 four separate portfolios: AIM ADVISOR FLEX
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND , AIM ADVISOR LARGE CAP VALUE FUND
and AIM ADVISOR REAL ESTATE FUND (individually, a "Fund" and collectively, the
"Funds"). Each portfolio of the Company offers Class A, Class B and Class C
shares. This Statement of Additional Information and the associated Prospectuses
relate solely to each Fund. Prior to August 4, 1997 and January 16, 1996, the
Company was known as INVESCO Advisor Funds, Inc. and the EBI Funds, Inc.,
respectively.
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 INVESCO Global Asset
Management Limited for INVESCO Capital Management, Inc. as sub-advisor to
INTERNATIONAL VALUE FUND. INVESCO, Inc. (formerly known as INVESCO Capital
Management, Inc.) is the sub-advisor for FLEX FUND, LARGE CAP VALUE FUND, and,
since January 1, 2000, of REAL ESTATE FUND.
As used in this Statement of Additional Information, 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.
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
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the outstanding liabilities of the Fund allocable to such class. Fund shares are
fully paid, non-assessable and fully transferable when issued and have no
preemptive rights and have such conversion and exchange rights as set forth in
the Prospectuses and Statement of Additional Information. Fractional shares have
proportionately the same rights, including voting rights, as are provided for
full shares.
Except as specifically noted above, shareholders of each Fund are
entitled to one vote per share (with proportionate voting for fractional
shares), irrespective of the relative net asset value of the different classes
of shares, where applicable, of a Fund. However, on matters affecting one
portfolio of the Company or one class of shares, a separate vote of shareholders
of that portfolio or class is required. Shareholders of a portfolio or class are
not entitled to vote on any matter which does not affect that portfolio or class
but which requires a separate vote of another portfolio or class. An example of
a matter which would be voted on separately by shareholders of a portfolio is
the approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan.
Shareholders of the Funds do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors may elect all of the members of the
Board of Directors of the Company. In such event, the remaining holders cannot
elect any directors 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 Investment
Company Act of 1940, as amended (the "1940 Act"), if such a request for a
meeting is received.
ADDITIONAL INFORMATION ABOUT THE FUNDS
LARGE CAP VALUE FUND
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 investment in common stocks which are identical to those established by
INVESCO, Inc., 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.
FLEX FUND
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 INVESCO, Inc.'s assessment
of business,
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<PAGE> 75
economic, and market conditions. INVESCO, Inc.'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.
INVESCO, Inc.'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 INVESCO, Inc., the Fund's sub-advisor, believes
are of a higher quality than has been generally recognized by the marketplace.
If INVESCO, Inc.'s analysis is correct in these cases, the value of these
obligations should increase as the marketplace recognizes the higher quality of
the obligations. INVESCO, Inc. 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 requirement, strength of management,
responsiveness to business conditions, credit standing and historic and current
results of operations.
Fixed-income securities in which the FLEX FUND invests consist
primarily of U.S. government obligations and carefully selected fixed income
corporate obligations which INVESCO, Inc. considers to be of investment grade
quality. The FLEX FUND invests only in those corporate obligations which in
INVESCO, Inc.'s opinion have the investment characteristics described by Moody's
Investors Service, Inc. ("Moody's") in rating corporate obligations within its
four highest ratings of Aaa, Aa, A and Baa and by Standard & Poor's, a division
of McGraw-Hill Companies Inc. ("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. 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
"Investment Strategies and Risks."
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 INVESCO, Inc. are of 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 INVESCO, Inc.'s judgement
and experience than would be the case if the FLEX FUND invested solely in rated
obligations. Obligations rated Baa 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 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
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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.
REAL ESTATE FUND
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 real estate investment trusts ("REIT") 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.
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 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.
INVESCO, Inc., 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.
INVESCO, Inc.'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.
INTERNATIONAL VALUE FUND
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
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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-advisors to
be of comparable quality.
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.
INVESCO Global Asset Management Limited ("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 of the Company." 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.
INVESTMENT STRATEGIES AND RISKS
The following discussion of investment policies supplements the
discussion of the investment objectives and policies set forth in the applicable
Prospectus under the heading "Investment Objective and Strategies" and
"Principal Risks of Investing in the Fund."
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.
FOREIGN SECURITIES
All of the Funds may invest directly in foreign securities and ADRs.
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
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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 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 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.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any other
European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with the euro. The anticipated replacement
of existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value of
securities held by a Fund.
DEVELOPING COUNTRIES
The INTERNATIONAL VALUE FUND may invest in securities of companies
domiciled in developing countries. Investment in developing countries presents
risks greater in degree than, and in addition to, those presented by investment
in foreign issuers in general. A number of developing 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 developing 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
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the economies and securities markets of certain emerging market countries. Many
of the developing 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 developing 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
The purpose of engaging in put and call transactions is to hedge
against changes in the market value of the Funds' 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 and will engage in such transaction only
for hedging purposes and only when the benefits to be gained outweigh the cost
of entering into such transaction. 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. 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. 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, a Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, a 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. 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. In addition, a 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 a 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.
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.
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, a 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
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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
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 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. 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
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contracts or write options (except to close out open positions) if, after such a
transaction, the aggregate principal amount of all open financial futures
contract 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.
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.
Foreign Currency Futures Contracts
A Fund may also use futures contracts to hedge the risk of changes in
the exchange rate of foreign currencies. A foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a foreign currency at a specified price and time.
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 its 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
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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, a 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.
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.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
The 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
three days in the future, or after a period longer than the customary settlement
period for that type of security. 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, a 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 segregated assets declines,
additional liquid assets will be segregated on a daily basis so that the market
value of the segregated liquid 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.
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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.
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 Fund will not enter into a swap
agreement with any single party if the net amount owed or to be 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
"Dividends, Distributions and Tax Matters-Swap Agreements."
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 ("CMO")"), and in other types of
mortgage-related securities.
MORTGAGE PASS-THROUGH SECURITIES. The FLEX FUND may invest in 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 principal payments at maturity or
specified call dates. Instead, these securities provide a monthly payment which
consists of both interest and principal
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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 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.
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 Funds 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.
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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"). The FLEX FUND and the
REAL ESTATE FUND may invest in CMOs. The REAL ESTATE FUND can also invest in
mortgage-backed bonds and asset-backed securities. 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.
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 Funds, 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 Fund'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.
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
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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
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.
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 Fund 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.
14
<PAGE> 87
REAL-ESTATE INDUSTRY SECURITIES
Because each of the funds can invest in securities of companies engaged
in the real-estate industry, they could conceivably own real estate directly as
a result of a default on debt securities it owns. A 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, environmental liability risks, 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 a fund. By
investing in REITs indirectly through a fund, a shareholder will bear not only
his proportionate share of the expenses of a fund, but also, indirectly, similar
expenses of the REITs.
15
<PAGE> 88
REPURCHASE AGREEMENTS
Each of the Funds may engage in repurchase agreements. A repurchase
agreement, which may be considered a "loan" under 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.
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.
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 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,
16
<PAGE> 89
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) 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 Fund 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:
17
<PAGE> 90
(1) For the LARGE CAP VALUE FUND and FLEX 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 and FLEX FUND may be invested in securities of Canadian issuers and
sponsored ADRs. The REAL ESTATE FUND may invest up to 25% of total assets in
foreign securities including unsponsored ADRs. The INTERNATIONAL VALUE FUND may
invest up to 100% of its total assets in securities of foreign issuers. All
restrictions are measured at the time of purchase.
(2) Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except as set forth in the Prospectuses 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.
(3) Engage in arbitrage transactions.
Except for the Funds' investment objectives and those investment
policies of a Fund specifically identified as fundamental, all investment
policies and practices described in the Prospectuses 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 policies different from the investment policies which the
shareholder considered appropriate at the time of investment in the Fund.
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
The overall management of the business and affairs of the Fund 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
18
<PAGE> 91
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.
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each director and officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046. All of the Company's executive officers hold similar
offices with some or all of the other investment companies managed or advised by
AIM or its subsidiaries (the " AIM Funds").
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING, AT LEAST, THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ------------------------------------------ ------------------- -------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (81) Director and Director and Chairman, A I M Management Group
Chairman Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company;
and Executive Vice Chairman and Director,
AMVESCAP PLC.
BRUCE L. CROCKETT (56) 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 (75) Director Formerly, Director, Cortland Trust Inc.
Six Blythewood Road (investment company), Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable Bancorporation.
EDWARD K. DUNN, JR. (64) Director Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 8th Floor Mortgage Corp. Formerly, Vice Chairman of the
Suite 805 Board of Directors, President and Chief Operating
Baltimore, MD 21201 Officer, Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares.
JACK FIELDS (48) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E (foreign trading company) and Twenty-First
8810 Will Clayton Parkway Century Group, Inc. (governmental affairs
Humble, TX 77338 company). Formerly, Member of the U. S. House of
Representatives.
</TABLE>
- -------------------
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
19
<PAGE> 92
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING, AT LEAST, THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ------------------------------------------ ------------------- -------------------------------------------------
<S> <C> <C>
**CARL FRISCHLING (63) Director Partner, Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue (law firm).
New York, NY 10022
*ROBERT H. GRAHAM (53) Director and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company;
Director, AMVESCAP PLC.
PREMA MATHAI-DAVIS (49) Director Chief Executive Officer, YWCA of the USA.
350 Fifth Avenue, Suite 301
New York, NY 10118
LEWIS F. PENNOCK (57) Director Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
LOUIS S. SKLAR (60) Director Executive Vice President, Development and
The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
GARY T. CRUM (52) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Executive Vice President,
A I M Management Group Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP
PLC.
</TABLE>
- ------------------
** A director who is an "interested person" of the Company as defined in
the 1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
20
<PAGE> 93
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING, AT LEAST, THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ----------------------------------------- ------------------- -------------------------------------------------
<S> <C> <C>
CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
General Counsel and Vice President, A I M Fund
Services, Inc.; and Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.
DANA R. SUTTON (41) Vice President and Vice President and Fund Controller, A I M
Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
ROBERT G. ALLEY (51) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
STUART W. COCO (44) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
MELVILLE B. COX (56) Vice President Vice President and Chief Compliance
Officer, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
KAREN DUNN KELLEY (39) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
EDGAR M. LARSEN (59) Vice President Vice President, A I M Capital Management, Inc.
</TABLE>
The standing committees of the Board of Directors are the Audit
Committee, the Capitalization Committee, the Investments Committee and the
Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for: (i) considering management's recommendations
of independent accountants for each Fund and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the Funds' independent accountants and
management's internal audit staff; and (iii) reviewing financial statements
contained in periodic reports to shareholders with the Funds' independent
accountants and management.
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<PAGE> 94
The members of the Capitalization Committee are Messrs. Bauer, Graham
(Chairman) and Pennock. The Capitalization Committee is responsible for: (i)
increasing or decreasing the aggregate number of shares of any class of the
Company's common stock by classifying and reclassifying the Company's authorized
but unissued shares of common stock, up to the Company's authorized capital;
(ii) fixing the terms of such classified or reclassified shares of common stock;
and (iii) issuing such classified or reclassified shares of common stock upon
the terms set forth in the applicable fund's prospectus, up to the Company's
authorized capital.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr.
Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's
investment-related compliance systems and procedures to ensure their continued
adequacy; and (ii) considering and acting, on an interim basis, between meetings
of the full Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for: (i) considering
and nominating individuals to stand for election as independent trustees as long
as the Company maintains a distribution plan pursuant to Rule 12b-1 under the
1940 Act; (ii) reviewing from time to time the compensation payable to the
independent directors; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent directors.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as directors, provided (i) that such
person is a shareholder of record at the time he or she submits such names and
is entitled to vote at the meeting of shareholders at which directors will be
elected, and (ii) that the Nominating and Compensation Committee or the Board of
Directors, as applicable, shall make the final determination of persons to be
nominated.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in connection with
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 or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds as well as a director of the
Funds. Each such director receives a fee, allocated among the AIM Funds for
which he or she serves as a director or trustee, which consists of an annual
retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each director of the Company during the year ended December 31, 1999:
22
<PAGE> 95
<TABLE>
<CAPTION>
RETIREMENT TOTAL
BENEFITS COMPENSATION
ESTIMATED COMPENSATION ACCRUED BY ALL FROM ALL
DIRECTOR FROM COMPANY(1) AIM FUNDS(2) AIM FUNDS(3)
- ------------------- ---------------------- -------------- ------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 4,735 37,485 103,500
Owen Daly II 4,735 122,898 103,500
Edward K. Dunn, Jr. 4,735 0 103,500
Jack Fields 4,634 15,826 101,500
Carl Frischling(4) 4,735 97,791 103,500
Robert H. Graham 0 0 0
Prema Mathai-Davis 4,655 0 101,500
Lewis F. Pennock 4,735 45,766 103,500
Ian W. Robinson(5) 1,304 94,442 25,000
Louis S. Sklar 4,655 90,232 101,500
</TABLE>
- ----------------
(1) The total amount of compensation deferred by all directors of the
Company during the fiscal year ended December 31, 1999, including
earnings thereon, was $31,806.
(2) During the fiscal year ended December 31, 1999, the total amount of
expenses allocated to the Company in respect of such retirement
benefits was $6,864. Data reflects compensation for the calendar year
ended December 31, 1999.
(3) Each director serves as director or trustee of at least twelve
registered investment companies advised by AIM. Data reflects total
compensation earned during the calendar year ended December 31, 1999.
(4) During the fiscal year ended December 31, 1999, the Company paid $4,844
in legal fees for services rendered by Kramer Levin Naftalis & Frankel
LLP. Mr. Frischling, a director of the Company, is a partner in such
firm.
(5) Mr. Robinson was a director until March 12, 1999, when he retired.
23
<PAGE> 96
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any of
the AIM Funds, A I M Management Group Inc. or any of 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 or her date of retirement equal to a
maximum of 75% of the annual retainer paid or accrued by the Applicable AIM
Funds for such director during the twelve-month period immediately preceding the
director's retirement (including amounts deferred under a separate agreement
between the Applicable AIM Funds and the director) and based on 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
all 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, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 20, 18, 11, 10 and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of Years of
Service with the Annual Retirement Compensation
Applicable AIM Paid by All
Funds Applicable AIM Funds
- ------------------ ------------------------------
<S> <C>
10 $67,500
9 $60,750
8 $54,000
7 $47,250
6 $40,500
5 $33,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis
(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
24
<PAGE> 97
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 or her deferral account, the
balance of the deferral account will be distributed to his or her designated
beneficiary in a single lump sum payment as soon as practicable after such
deferring 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.
THE ADVISORY AND SUB-ADVISORY AGREEMENTS
The Company has entered into an Investment Advisory Agreement with AIM.
AIM was organized in 1976, and, together with its subsidiaries, advises or
manages approximately 120 investment portfolios encompassing a broad range of
investment objectives. AIM is a direct wholly owned subsidiary of A I M
Management Group Inc. ("AIM Management"), a holding company that has been
engaged in the financial services business since 1976. The address of AIM is 11
Greenway Plaza, Suite 100, Houston, TX 77046. AIM Management is an indirect
wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR,
England. AMVESCAP PLC and its subsidiaries are an independent investment
management group engaged in institutional investment management and retail
mutual fund businesses in the United States, Europe and the Pacific region.
Certain of the directors and officers of AIM are also executive officers of the
Company and their affiliations are shown under "Directors and Officers."
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees to (a) pre-clear all personal
securities transactions subject to the Code of Ethics; (b) file reports
regarding such transactions; (c) refrain from personally engaging in (i)
short-term trading of a security, (ii) transactions involving a security within
seven days of an AIM Fund transaction involving the same security (subject to a
de minimis exception), and (iii) transactions involving securities being
considered for investment by an AIM Fund (subject to the de minimis exception);
and (d) abide by certain other provisions of the Code of Ethics. The de minimis
exception under the Code of Ethics covers situations where there is no material
conflict of interest because of the large market capitalization of a security
and the relatively small number of shares involved in a personal transaction.
The Code of Ethics also generally prohibits AIM employees from purchasing
securities in initial public offerings. Personal trading reports are
periodically reviewed by AIM, and the Board of Directors reviews quarterly and
annual reports (which summarize any significant violations of the Code of
Ethics). Sanctions for violating the Code of Ethics may include censure,
monetary penalties, suspension or termination of employment.
The sub-advisor to the LARGE CAP VALUE FUND and FLEX FUND is INVESCO,
Inc. (formerly known as INVESCO Capital Management, Inc.), a Delaware
corporation, which has its principal office at 1315 Peachtree Street, N. E.,
Atlanta, Georgia 30309. The sub-advisor to the REAL ESTATE FUND is INVESCO,
Inc., a Delaware corporation. INVESCO, Inc. is registered as an investment
advisor under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). INVESCO,Inc. 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). Funds are supervised by
investment managers who utilize INVESCO, Inc.'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 INTERNATIONAL VALUE FUND is INVESCO Global Asset
Management Limited, a Bermuda corporation ("IGAM"), which has its principal
office at Cedar House, 12 Bermudian Rd., 3rd Floor,
25
<PAGE> 98
Hamilton, HM AX, Bermuda. IGAM is registered as an investment advisor under the
Advisers Act. IGAM's responsibilities include analyzing global economic trends
and establishing AMVESCAP PLC's global investment asset allocation for AMVESCAP
PLC affiliates.
AIM and INVESCO, Inc. provide general investment advice and portfolio
management to the LARGE CAP VALUE FUND, FLEX FUND and REAL ESTATE FUND. AIM and
IGAM provide general investment advice and portfolio management to INTERNATIONAL
VALUE FUND. AIM, INVESCO, Inc. and IGAM are indirect wholly owned subsidiaries
of AMVESCAP (formerly, AMVESCO PLC and INVESCO PLC). AMVESCAP 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 INVESCO Capital Management, Inc. as sub-advisor to
INTERNATIONAL VALUE FUND.
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 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. 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. In accordance with policies established by the Board of
Directors, AIM may take into account sales of shares of the Funds and other
funds advised by AIM in selecting broker-dealers to effect portfolio
transactions on behalf 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 day-to-day operations of the Funds are provided under a
separate Amended and Restated Operating Services Agreement between the Company
and AIM. (See "Operating Services Agreement.")
Rule 18f-3 under the 1940 Act ("Rule 18f-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
has adopted a multiple class plan pursuant to Rule 18f-3, which provides that
advisory and operating services fees (see "Operating Services Agreement") are
expenses of a particular Fund and are not attributable to a particular class of
the Fund ("Fund Expenses") and, therefore, 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.
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
26
<PAGE> 99
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. In order to increase the return to investors, AIM may from
time to time waive or reduce its fee. Voluntary fee waivers or reductions may be
rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions set forth in the Fee Tables in the Prospectuses may not be
terminated or amended to the Fund's detriment during the period stated in the
agreement between AIM and the Fund. On an annual basis, the advisory fee is
equal to 0.75% of the average net asset value 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 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 IGAM
and INVESCO, Inc. 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; 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 Agreements will each continue from year to year, provided that they
are 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, 1999, 1998 and 1997, the
aggregate amounts of the advisory fees paid to AIM (or INVESCO Services, Inc.,
the prior advisor) by the Funds, were as follows:
<TABLE>
<CAPTION>
Aug. 4 Jan. 1
to Dec. 31 to Aug. 3
Fund 1999 1998 1997* 1997
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND $1,382,625 $1,430,336 $ 698,693 $ 486,185
FLEX FUND $5,635,894 $5,051,593 2,511,884 1,732,896
REAL ESTATE FUND $ 473,702 $ 625,129 229,632 90,122
INTERNATIONAL VALUE FUND $1,307,027 $1,238,568 536,578 272,940
</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 Amended and Restated Operating Services Agreement with the Fund (the
"Operating Services Agreement"). Under the Operating Services Agreement, the
Company retains AIM to provide or arrange to provide accounting, legal (except
litigation), dividend disbursing, registrar, custodial, shareholder reporting,
sub-accounting and recordkeeping services and functions for each fund. These
agreements provide that AIM shall reduce its fees or reimburse expenses for any
Fund to the extent necessary to ensure that the
27
<PAGE> 100
aggregate fees and expense reimbursements paid to all persons who provide
services to such Fund do not exceed, on are annual basis, for such fund, 0.45%
of the average daily net assets of the Fund.
The combined effect of the Advisory Agreements, 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 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 funds(s) . 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 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.
AIM Distributors has contractually agreed to limit the Funds' Class A
shares' Rule 12b-1 distribution plan payments to 0.25%. AIM has contractually
agreed to limit total annual operating expenses, excluding management fees, Rule
12b-1 distribution fees, interest expense and extraordinary items for REAL
ESTATE FUND, to 0.45%.
ADMINISTRATIVE SERVICES AGREEMENT
The Funds have entered into a Master Administrative Services Agreement
(the "Administrative Services Agreement") with AIM. Pursuant to the
Administrative Services Agreement, AIM has agreed to provide or arrange for the
provision of certain accounting, shareholder services and other administrative
services to the Funds, including the services of a principal financial officer
of the Funds and related staff. As compensation to AIM for its services under
the Administrative Services Agreement, the Funds reimburse AIM for expenses
incurred by AIM or its subsidiaries in connection with such services, as may be
approved by the Company's Board of Directors. The Administrative Services
Agreement will continue in effect until June 30, 2001, and from year to year
thereafter only if such continuance is specifically approved at least annually
by (i) the Company's Board of Directors or the vote of a "majority of the
outstanding voting securities" of the Funds (as defined in the 1940 Act), and
(ii) the affirmative vote of a majority of the Non-Interested Directors by votes
cast in person at a meeting called for such purpose.
The Funds paid AIM the following amounts as reimbursement of
administrative services costs under the Administrative Services Agreement for
the period July 1, 1999 through December 31, 1999:
<TABLE>
<S> <C>
FLEX FUND $64,957
INTERNATIONAL VALUE FUND 25,721
LARGE CAP VALUE FUND 25,205
REAL ESTATE FUND 25,205
</TABLE>
The Administrative Services Agreement became effective on July 1, 1999.
Prior to that date, AIM provided operating services, including certain
administrative services, to the Funds pursuant to a prior operating and
services agreement between AIM and the Funds. The Funds paid AIM the following
amounts under the prior operating services agreement for the fiscal years ended
December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Aug. 4 Jan. 1
to Dec. 31 to Aug. 3
1999 1998 1997* 1997
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FLEX FUND..................... $443,754 $1,703,905 $1,106,526 $1,407,357
INTERNATIONAL VALUE FUND...... 151,347 390,044 178,446 185,826
LARGE CAP VALUE FUND.......... 183,274 565,610 313,139 397,788
REAL ESTATE FUND.............. 114,556 275,972 84,332 73,736
</TABLE>
* Effective August 4, 1997, AIM became advisor to the Funds.
AIM used these amounts to reimburse itself for certain costs it
incurred under the prior operating services agreement and to pay certain third
party service provides for accounting, legal, dividend disbursing, registrar,
custodial, shareholder reporting, sub-accounting and recordkeeping services and
functions.
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
28
<PAGE> 101
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 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.
CLASS A AND CLASS C DISTRIBUTION PLAN. The Company has adopted a Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the 1940 Act relating to
the Class A and Class C shares of the Funds (the "Class A and C Plan"). The
Class A and C Plan provides that 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 attributable to Class A shares and 1.00% of the average net
assets attributable to Class C shares. For both Class A and Class C shares, this
expense includes the payment of 0.25% of average annual net assets to
broker-dealers and other qualifying financial institutions as a "service fee"
for providing account maintenance or personal service to existing shareholders.
Under the Class A and C Plan, broker-dealers selling Fund shares may be
paid fees for selling shares and maintaining Fund assets. For Class A shares, 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. For Class C
shares, 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
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.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' shares to such dealers'
customers, and for
29
<PAGE> 102
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.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in
30
<PAGE> 103
the Fee Table in the Prospectuses may not be terminated or amended to the Fund's
detriment during the period stated in the agreement between AIM Distributors and
the Fund.
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 the allocation of actual fees paid by each
of the Funds under the Plan for Class A shares for the year ended December 31,
1999, was as follows:
<TABLE>
<CAPTION>
LARGE CAP REAL INTERNATIONAL
VALUE FUND FLEX FUND ESTATE FUND VALUE FUND
---------- --------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A
Advertising .................. $ 1,550 $ 2,987 $ 289 $ 1,355
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders) ................ 58 295 24 134
Seminars ..................... 0 597 134 447
Compensation to
Underwriters to partially
offset other marketing
expenses ..................... 0 0 0 0
Compensation to
Dealers including
finder's fees ................ 31,235 109,992 46,815 65,699
Compensation to
Sales Personnel .............. 0 0 0 0
Annual Report Total .......... 32,843 113,871 47,262 67,635
</TABLE>
31
<PAGE> 104
An estimate by category of the allocation of actual fees paid by each of the
Funds under the Plan for Class B shares for the year ended December 31, 1999,
was as follows:
<TABLE>
<CAPTION>
LARGE CAP REAL INTERNATIONAL
VALUE FUND FLEX FUND ESTATE FUND VALUE FUND
---------- --------- ----------- -------------
CLASS B
<S> <C> <C> <C> <C>
Advertising ............. $ 4,665 $ 7,029 $ 3,963 $ 6,265
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders) ........... 0 262 0 0
Seminars ................ 0 1,458 0 0
Compensation to
Underwriters to partially
offset other marketing
expenses ................ 42,101 68,479 55,344 31,913
Compensation to
Dealers including
finder's fees ........... 9,368 14,077 14,485 4,373
Compensation to
Sales Personnel ......... 0 0 0 0
Annual Report Total ..... 56,134 91,305 73,792 42,551
</TABLE>
32
<PAGE> 105
An estimate by category of the allocation of actual fees paid by each of the
Funds under the Plan for Class C shares for the year ended December 31, 1999,
was as follows:
<TABLE>
<CAPTION>
LARGE CAP REAL INTERNATIONAL
VALUE FUND FLEX FUND ESTATE FUND VALUE FUND
---------- --------- ----------- -------------
CLASS C
<S> <C> <C> <C> <C>
Advertising ............. $ 0 $ 0 $ 0 $ 0
Printing and mailing
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders) ........... 0 0 0 0
Seminars ................ 0 0 0 0
Compensation to
Underwriters to partially
offset other marketing
expenses ................ 112,352 785,172 40,509 180,143
Compensation to
Dealers including
finder's fees ........... 1,543,642 6,182,562 222,987 813,792
Compensation to
Sales Personnel ......... 0 0 0 0
Annual Report Total ..... 1,655,995 6,967,734 263,495 993,935
</TABLE>
For the fiscal year ended December 31, 1999, each Fund paid AIM Distributors
the following amounts with respect to the Class A shares under the Distribution
Plans:
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
1999
----
<S> <C>
LARGE CAP VALUE FUND $ 32,843
FLEX FUND 113,871
REAL ESTATE FUND 47,262
INTERNATIONAL VALUE FUND 67,620
</TABLE>
For the fiscal year ended December 31, 1999, each Fund paid AIM Distributors
the following amount with respect to the Class B shares under the Distribution
Plans:
<TABLE>
<CAPTION>
CLASS B SHARES
--------------
1999
----
<S> <C>
LARGE CAP VALUE FUND $ 56,134
FLEX FUND 91,305
REAL ESTATE FUND 73,791
INTERNATIONAL VALUE FUND 42,551
</TABLE>
For the fiscal year ended December 31, 1999, each Fund paid AIM Distributors
the following amount with respect to the Class C shares under the Distribution
Plans:
33
<PAGE> 106
<TABLE>
<CAPTION>
CLASS C SHARES
--------------
1999
----
<S> <C>
LARGE CAP VALUE FUND $1,655,995
FLEX FUND 6,967,734
REAL ESTATE FUND 263,496
INTERNATIONAL VALUE FUND 993,935
</TABLE>
THE DISTRIBUTOR
AIM Distributors, the Company's distributor, is the principal underwriter of
the Company under separate Distribution Agreements (the "Distribution
Agreements"). 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.
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of each Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors.
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Funds' shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B and Class C shares of the Funds at the
time of such sales.
The Company (on behalf of any class of any Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset-based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors; provided, however, that a complete
termination of the Class B Plan (as defined in such Plan) would terminate all
payments to AIM Distributors. Termination of the Class B Plan or the
Distribution Agreement for Class B shares would not affect the obligation of a
Fund and its Class B shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its rights to
payments under the Class B Plan in order to finance distribution expenditures in
respect of Class B shares.
The following chart reflects the total sales charges paid in connection with
the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the years ended December 31, 1999, 1998 and for the period
August 4, 1997 to December 31, 1997, and the amount retained by the Prior
Distributor for the period December 31, 1996 to August 3, 1997:
34
<PAGE> 107
<TABLE>
<CAPTION>
AUGUST 4, 1997 JANUARY 1, 1997
TO TO
1999 1998 DECEMBER 31, 1997 AUGUST 3, 1997
---- ---- ------------------ --------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED RETAINED
------- -------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LARGE CAP VALUE FUND $114,849 $ 20,196 $205,367 $ 32,564 $ 50,144 $ 7,461 $ 999
FLEX FUND 149,959 22,488 209,334 33,479 80,657 11,729 6,860
REAL ESTATE FUND 85,422 13,906 495,211 85,554 356,286 54,138 1,424
INTERNATIONAL VALUE FUND 57,098 9,075 159,987 24,723 113,771 16,464 8,333
</TABLE>
The following chart reflects the contingent deferred sales charges paid by
Class A shareholders for the years ended December 31, 1999 and 1998 and for the
period August 4, 1997 to December 31, 1997, and by Class B shareholder for the
year ended December 31, 1999 and the period March 3, 1998 (inception date for
Class B shares) to December 31, 1998, and by Class C shareholders for the years
ended December 31, 1999 and 1998 and for the period August 4, 1997 to December
1997, and the amount paid by Class A and Class C shareholders to the Prior
Distributor for the period January 1, 1997 to August 3, 1997:
<TABLE>
<CAPTION>
1999 1998 AUGUST 4, 1997 JANUARY 1, 1997
---- ---- TO TO
DECEMBER 31, 1997 AUGUST 3, 1997
----------------- --------------
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND $ 29,018 $ 34,868 $ 570 $ 8,692
FLEX FUND 133,285 100,172 18,422 18,877
REAL ESTATE FUND 9,617 25,274 2,643 1,935
INTERNATIONAL VALUE FUND 63,088 67,046 13,392 8,692
</TABLE>
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge ranging
from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds include Class A shares of each of AIM Advisor Flex Fund, AIM
Advisor International Value Fund, AIM Advisor Large Cap Value Fund, AIM
Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM Blue
Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation
Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM European
Development Fund, AIM Euroland Growth Fund, AIM Global Utilities Fund, AIM
Global Growth & Income Fund, AIM International Equity Fund, AIM Japan Growth
Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Large Cap
Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund, AIM Mid
Cap Opportunities Fund, AIM New Pacific Growth Fund, AIM Select Growth Fund, AIM
Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value Fund and AIM
Weingarten Fund.
35
<PAGE> 108
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ---------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer
Products and Services Fund, AIM Global Financial Services Fund, AIM Global
Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM
Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund,
AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM
High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM
Large Cap Growth Fund, AIM Income Fund, AIM Intermediate Government Fund, AIM
Latin American Growth Fund, AIM Municipal Bond Fund, AIM Strategic Income Fund
and AIM Tax-Exempt Bond Fund of Connecticut.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
-------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------ ------------- ---------- ---------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
36
<PAGE> 109
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
---------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment In Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ----------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more of Category I,
II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. At the option of the dealer, such
incentives may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
37
<PAGE> 110
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional
shares in any of the Funds on or after May 1, 1995, and in circumstances where
AIM Distributors grants an exemption on particular transactions.
Exchanges of AIM Cash Reserve Fund of AIM Money Market Fund for Class B
shares or Class C shares are considered sales of such Class B or Class C shares
for purposes of the sales charges and dealer concessions discussed above.
AIM Distributors may pay investment dealers or other financial service firms
for share purchases (measured on an annual basis) of Class A Shares of all AIM
Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund
and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit plan
as follows: 1.00% 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.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a
pension, profit-sharing, or other benefit plan established exclusively
for the benefit of any such person, such as an IRA, Roth IRA, a
single-participant money-purchase/profit-sharing plan or an individual
participant in a 403(b) Plan (unless such 403(b) plan qualifies as the
purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization
described under Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the Funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified
38
<PAGE> 111
under Section 401 of the Code) and 457 plans, although more than one
beneficiary or participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and other Elective
Simplified Employee Pension account (SAR-SEP) or a Savings Incentive
Match Plans for Employees IRA (SIMPLE IRA), where the employer has
notified the distributor in writing that all of its related employee
SEP, SAR-SEP or SIMPLE IRA accounts should be linked; or
o any other organized group of persons, whether incorporated or not,
provided the organization has been in existence for at least six months
and has some purpose other than the purchase at a discount of redeemable
securities of a registered investment company.
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of AIM Floating Rate Fund) within the following 13 consecutive months. By
marking the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably
39
<PAGE> 112
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 AIM Funds and (iii) shares of AIM
Floating Rate Fund) at the time of the proposed purchase. Rights of Accumulation
are also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. To determine whether or not a reduced initial sales charge
applies to a proposed purchase, AIM Distributors takes into account not only the
money which is invested upon such proposed purchase, but also the value of all
shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash
Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and
Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund)
owned by such purchaser, calculated at their then current public offering price.
If a purchaser so qualifies for a reduced sales charge, the reduced sales charge
applies to the total amount of money then being invested by such purchaser and
not just to the portion that exceeds the breakpoint above which a reduced sales
charge applies. For example, if a purchaser already owns qualifying shares of
any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000
in a fund, with a maximum initial sales charge of 5.50%, the reduced initial
sales charge of 5.25% will apply to the full $20,000 purchase and not just to
the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the
discount applicable to a particular purchase, the purchaser or his dealer must
furnish AFS with a list of the account numbers and the names in which such
accounts of the purchaser are registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a
fund; (b) exchanges of shares of certain funds; (c) use of the reinstatement
privilege; or (d) a merger, consolidation or acquisition of assets of a fund.
The following purchasers will not pay initial sales charges on purchases of
Class A shares because there is a reduced sales effort involved in sales to
these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of
their immediate family) of AIM Management, its affiliates or The AIM
Family of Funds, --Registered Trademark-- and any foundation, trust
or employee benefit plan established exclusively for the benefit of,
or by, such persons;
o Any current or retired officer, director, or employee (and members of
their immediate family), of CIGNA Corporation or its affiliates, or of
First Data Investor Services Group; and any deferred compensation plan
for directors of investment companies sponsored by CIGNA Investments,
Inc. or its affiliates;
o Sales representatives and employees (and members of their immediate
family) of selling group members or financial institutions that have
arrangements with such selling group members;
o Purchases through approved fee-based programs;
40
<PAGE> 113
o Employee benefit plans designated as purchasers as defined above, and
non-qualified plans offered in conjunction therewith, provided the
initial investment in the plan(s) is at least $1 million; the sponsor
signs a $1 million LOI; the employer-sponsored plan(s) has at least 100
eligible employees; or all plan transactions are executed through a
single omnibus account per Fund and the financial institution or service
organization has entered into the appropriate agreements with the
distributor. Section 403(b) plans sponsored by public educational
institutions are not eligible for a sales charge exception based on the
aggregate investment made by the plan or the number of eligible
employees. Purchases of AIM Small Cap Opportunities Fund by such plans
are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1986, or of AIM Charter Fund on
November 17, 1986, who have continuously owned shares having a market
value of at least $500 and who purchase additional shares of the same
Fund;
o Shareholders of record of Advisor Class shares of AIM International
Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have
continuously owned shares of the AIM Funds;
o Unitholders of G/SET series unit investment trusts investing proceeds
from such trusts in shares of AIM Weingarten Fund or AIM Constellation
Fund; provided, however, prior to the termination date of the trusts, a
unitholder may invest proceeds from the redemption or repurchase of his
units only when the investment in shares of AIM Weingarten Fund and AIM
Constellation Fund is effected within 30 days of the redemption or
repurchase;
o A shareholder of a fund that merges or consolidates with an AIM Fund or
that sells its assets to an AIM Fund in exchange for shares of an AIM
Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who since that
date continually have owned shares of one or more of these funds;
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October 1989, and who
have continuously held shares in the GT Global funds since that time;
and
o Shareholders of record of Advisor Class shares of an AIM Fund on
February 11, 2000 who have continuously owned shares of that AIM Fund,
and who purchase additional shares of that AIM Fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is
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invested in the former GT Global funds, which are permitted to be made without
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in the former GT Global funds;
(6) redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (7) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (8) redemptions made in connection with a distribution from any
retirement plan or account that is permitted in accordance with the provisions
of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (9)
redemptions made in connection with a distribution from any retirement plan or
account that involves the return of an excess deferral amount pursuant to
Section 401(k)(8) or Section 402(g)(2) of the Code; (10) redemptions made in
connection with a distribution from a qualified profit-sharing or stock bonus
plan described in Section 401(k) of the Code to a participant or beneficiary
under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee
(determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (11)
redemptions made by or for the benefit of certain states, counties or cities, or
any instrumentalities, departments or authorities thereof where such entities
are prohibited or limited by applicable law from paying a sales charge or
commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a Prospectus: (1)
total or partial redemptions resulting from a distribution following retirement
in the case of a tax-qualified employer-sponsored retirement; (2) minimum
required distributions made in connection with an IRA, Keogh Plan or custodial
account under Section 403(b) of the Code or other retirement plan following
attainment of age 70 1/2; (3) redemptions pursuant to distributions from a
tax-qualified employer-sponsored retirement plan, which is invested in the
former GT Global funds, which are permitted to be made without penalty pursuant
to the Code, other than tax-free rollovers or transfers of assets, and the
proceeds of which are reinvested in the former GT Global funds; (4) redemptions
made in connection with participant-directed exchanges between options in an
employer-sponsored benefit plan; (5) redemptions made for the purpose of
providing cash to fund a loan to a participant in a tax-qualified retirement
plan; (6) redemptions made in connection with a distribution from any retirement
plan or account that is permitted in accordance with the provisions of Section
72(t)(2) of the Code, and the regulations promulgated thereunder; (7)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund, AIM
Advisor International Value Fund, AIM Advisor Large Cap Value Fund and
AIM Advisor Real Estate Fund by shareholders of record on April 30,
1995, of these Funds, except that shareholders whose broker-dealers
maintain a single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to those
shareholders, and are unable to segregate shareholders of record prior
to April 30, 1995, from shareholders whose accounts were opened after
that date will be subject to a CDSC on all purchases made after March 1,
1996;
o Redemptions following the death or post-purchase disability of (1) any
registered shareholders on an account or (2) a settlor of a living
trust, of shares held in the account at the time of death or initial
determination of post-purchase disability;
o Certain distributions from individual retirement accounts, Section
403(b) retirement plans, Section 457 deferred compensation plans and
Section 401 qualified plans, where redemptions result from (i) required
minimum distributions to plan participants or beneficiaries who are age
70 1/2 or older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund; (ii) in kind
transfers of assets where the participant or beneficiary notifies the
distributor of the
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transfer no later than the time the transfer occurs; (iii) tax-free
rollovers or transfers of assets to another plan of the type described
above invested in Class B or Class C shares of one or more of the AIM
Funds; (iv) tax-free returns of excess contributions or returns of
excess deferral amounts; and (v) distributions on the death or
disability (as defined in the Internal Revenue Code of 1986, as amended)
of the participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of
12% of the account value on a per fund basis, at the time the withdrawal
plan is established, provided the investor reinvests his dividends;
o Liquidation by the Fund when the account value falls below the minimum
required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies the
distributor prior to the time of investment that the dealer waives the
payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and II
(See "Sales Charges and Dealer Concessions") purchased in amounts of $1 million
or more, no CDSC will be applied in the following situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in connection
with employee terminations or withdrawals, provided the total amount
invested in the plan is at least $1,000,000; the sponsor signs a $1
million LOI; or the employer-sponsored plan has at least 100 eligible
employees; provided, however, that 403(b) plans sponsored by public
educational institutions shall qualify for the CDSC waiver on the basis
of the value of each plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the plan or on the
number of eligible employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer waives
the amounts otherwise payable to it by the distributor and notifies the
distributor prior to the time of investment; and
o Shares acquired by exchange from Class A shares of funds in sales charge
Categories I and II unless the shares acquired by exchange are redeemed
within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Funds may be
purchased appears in the Prospectuses under the caption "Purchasing Shares - How
to Purchase Shares."
The sales charge normally deducted on purchases of Class A shares of the
Funds is used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of such shares. Since
there is little expense associated with unsolicited orders placed directly with
AIM Distributors by persons, who because of their relationship with the Funds or
with AIM and its affiliates, are familiar with the Funds, or whose programs for
purchase involve little expense (e.g., because of the size of the transaction
and shareholder records required), AIM Distributors believes that it is
appropriate and in the Funds'
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<PAGE> 116
best interests that such persons be permitted to purchase Class A shares of the
Funds through AIM Distributors without payment of a sales charge. The persons
who may purchase Class A shares of the Funds without a sales charge are
described in "REDUCTIONS IN INITIAL SALES CHARGES--Purchases At Net Asset
Value".
Complete information concerning the method of exchanging shares of the Funds
for shares of the other mutual funds managed or advised by AIM is set forth in
the Prospectuses under the caption "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the caption "Redeeming Shares - 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 Funds' obligation to redeem shares, AIM Distributors may also repurchase
shares as an accommodation to shareholders. To effect a repurchase, those
dealers who have executed Selected Dealer Agreements with AIM Distributors must
phone orders to the order desk of the Fund telephone: (713) 626-1919, Extension
5001 (in Houston) or (800) 347-4246 (elsewhere) and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value of a Fund next determined after such order is received. Such arrangement
is subject to timely receipt by AFS of all required documents in good order. If
such documents are not received within a reasonable time after the order is
placed, the order is subject to cancellation. While there is no charge imposed
by the Funds or by AIM Distributors (other than any applicable CDSC) when shares
are redeemed or repurchased, dealers may charge a fair service fee for handling
the transaction.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as
determined by applicable rules and regulations of the SEC, (b) the NYSE is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined by the SEC
exists making disposition of portfolio securities or the valuation of the net
assets of a Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
1. the investor fails to furnish a correct TIN to the Fund, or
2. the IRS notifies the Fund that the investor furnished an incorrect TIN,
or
3. the investor or the Fund is notified by the IRS that the investor is
subject to backup withholding because the investor failed to report all
of the interest and dividends on such investor's tax return (for
reportable interest and dividends only), or
4. the investor fails to certify to the Fund that the investor is not
subject to backup withholding under (3) above (for reportable interest
and dividend accounts opened after 1983 only), or
5. the investor does not certify his TIN. This applies only to non-exempt
mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five
situations discussed above. Redemption proceeds and long-term gain distributions
are subject to backup withholding only if (1), (2) or (5) above applies.
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Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual
retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or
instrumentalities
o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
o a futures commission merchant registered with the Commodity Futures
Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the 1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947.
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct
TIN will be subject to a $50 penalty imposed by the IRS unless such failure is
due to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
federal income tax withholding at a 30% rate on ordinary income dividends and
distributions and return of capital distributions. Under applicable treaty law,
residents of treaty countries may qualify for a reduced rate of withholding or a
withholding exemption.
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NET ASSET VALUE DETERMINATION
In accordance with the current rules and regulations of the SEC, the
net asset value of a share of each Fund is determined once daily as of the close
of the customary trading session of the NYSE (generally 4:00 p.m. Eastern Time),
on each business day of the Fund. In the event the NYSE closes early (i.e.,
before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a
Fund share is determined as of the close of the NYSE on such day. For purposes
of determining net asset value per share, futures and options contract closing
prices which are available fifteen (15) minutes after the close of the customary
trading session of the NYSE will generally be used. The income or loss and the
expenses (except those listed below) of a Fund are allocated to each class on
the basis of the net assets of the Fund allocable to each such class, calculated
as of the close of business on the previous business day, as adjusted for the
current day's shareholder activity of each class. Distribution and service fees
and transfer agency fees (to the extent different rates are charged to different
classes) are allocated only to the class to which such expenses relate. The net
asset value per share of a class is determined by subtracting the liabilities
(e.g., the expenses) of the Fund allocated to the class from the assets of the
Fund allocated to the class and dividing the result by the total number of
shares outstanding of such class. Determination of each Fund's net asset value
per share is made in accordance with generally accepted accounting principles.
A security listed or traded on an exchange (except convertible bonds)
is valued at its last sales price on the exchange where the security is
principally traded or, lacking any sales on a particular day, the security is
valued at the closing bid price on that day, prior to the determination of net
asset value. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market system) is valued on
the basis of prices provided by independent pricing services. Each security
reported on the NASDAQ National Market System is valued at the last sales price
on the valuation date, or lacking a last sale, at the closing bid price on that
day; option contracts are valued at the mean between the closing bid and asked
prices on the exchange where the contracts are principally traded; futures
contracts are valued at final settlement price quotations from the primary
exchange on which they are traded. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by an independent pricing service may be determined
without exclusive reliance on quoted prices and may reflect appropriate factors
such as dividend rate, yield, type of issue, coupon rate and maturity date.
Securities for which market quotations are not readily available or for which
market quotations are not reflective of fair value are valued at fair value as
determined in good faith by or under the supervision of the Company's officers
in a manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having sixty (60) days or less to maturity are valued at
amortized cost, which approximates market value. (See also "Purchasing Shares -
How to Purchase Shares," and "Redeeming Shares - How to Redeem Shares" and
"Pricing of Shares" in each Prospectus.)
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of a Fund's shares are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which they are determined and the close of the customary trading session of the
NYSE which will not be reflected in the computation of a Fund's net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Directors.
Fund securities primarily traded in foreign markets may be traded in
such markets on days which are not business days of the Fund. Because the net
asset value per share of each Fund is determined only on business days of the
Fund, the net asset value per share of a Fund may be significantly affected on
days when an investor can not exchange or redeem shares of the Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND 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 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, 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 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
distribute 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 each Prospectus.)
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.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are not
described in the Prospectuses. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectuses is not intended as a substitute for
careful tax planning.
SPECIAL TAX INFORMATION
For taxable years in which it is eligible to do so, the 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.
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QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Code. As a regulated investment company, each Fund is
not subject to federal income tax on the portion of its net investment income
(i.e., taxable interest, dividends and other taxable ordinary income, net of
expenses) and capital gain net income (i.e., the excess of capital gains over
capital losses) that it distributes to shareholders, provided that it
distributes at least 90% of its investment company taxable income (i.e., net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are described below.
Distributions by a Fund made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year, will be
considered distributions of income and gains of the taxable year and can
therefore satisfy the Distribution Requirement.
Each Fund may use "equalization accounting" in determining the portion
of its net investment income and capital gain net income that has been
distributed. A Fund that elects to use equalization accounting will allocate a
portion of its realized investment income and capital gains to redemptions of
Fund shares and will reduce the amount that it distributes in cash. However,
each Fund intends to make cash distributions for each taxable year in an
aggregate amount that is sufficient to satisfy the Distribution Requirement
without taking into account its use of equalization accounting. The Internal
Revenue Service has not published any guidance concerning the methods to be used
in allocating investment income and capital gains to redemptions of shares. In
the event that the Internal Revenue Service determines that a Fund is using an
improper method of allocation and has underdistributed its net investment income
and capital gain net income for any taxable year, such Fund may be liable for
additional federal income tax.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "Income Requirement").
In addition to satisfying the requirements described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of each Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the
companies, and securities of other issuers, the Fund has not invested more than
5% of the value of the Fund's total assets in securities of such issuer and as
to which the Fund does not hold more than 10% of the outstanding voting
securities of such issuer), and no more than 25% of the value of its total
assets may be invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment companies),
or in two or more issuers which the Fund controls and which are engaged in the
same or similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of such Fund's current and accumulated earnings
and profits. Such distributions generally will be eligible for the dividends
received deduction in the case of corporate shareholders.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation unless the
Fund made an election to accrue market discount into income. In addition, under
the rules of Code
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Section 988, gain or loss recognized on the disposition of a debt obligation
denominated in a foreign currency or an option with respect thereto (but only to
the extent attributable to changes in foreign currency exchange rates), and gain
or loss recognized on the disposition of a foreign currency forward contract or
of foreign currency itself, will generally be treated as ordinary income or
loss.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if (a) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (b) the
asset is otherwise held by the Fund as part of a "straddle", or (c) the asset is
stock and the Fund grants certain call options with respect thereto. In
addition, a Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position. Any gain recognized by a Fund on
the lapse of, or any gain or loss recognized by a Fund from a closing
transaction with respect to, an option written by the Fund will generally be
treated as a short-term capital gain or loss. In the case of covered options,
gain or loss may be long-term.
Other hedging transactions that may be engaged in by certain of the
Funds (such as short sales "against the box") may be subject to special tax
treatment as "constructive sales" under section 1259 of the Code if a Fund holds
certain "appreciated financial positions" (defined generally as any interest
(including a futures or forward contract, short sale or option) with respect to
stock, certain debt instruments, or partnership interests if there would be a
gain were such interest sold, assigned, or otherwise terminated at its fair
market value). Upon entering into a constructive sales transaction with respect
to an appreciated financial position, a Fund will be deemed to have
constructively sold such appreciated financial position and will recognize gain
as if such position were sold, assigned, or otherwise terminated at its fair
market value on the date of such constructive sale (and will generally take into
account any gain for the taxable year which includes such date).
Some of the forward foreign currency exchange contracts, options and
futures contracts that certain of the Funds may enter into will be subject to
special tax treatment as "Section 1256 contracts." Section 1256 contracts are
treated as if they are sold for their fair market value on the last business day
of the taxable year, regardless of whether a taxpayer's obligations (or rights)
under such contracts have terminated (by delivery, exercise, entering into a
closing transaction or otherwise) as of such date. Any gain or loss recognized
as a consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss arising
as a consequence of the year-end deemed sale of such contracts) is deemed to be
60% long-term (taxable at a maximum rate of 20% for non-corporate shareholders)
and 40% short-term gain or loss. However, in the case of Section 1256 contracts
that are forward foreign currency exchange contracts, the net gain or loss is
separately determined and (as discussed above) generally treated as ordinary
income or loss.
Because application of the rules governing Section 1256 contracts and
constructive sales may affect the character of gains or losses and/or accelerate
the recognition of gains or losses from the affected investment positions, the
amount which must be distributed to shareholders and which will be taxed to
shareholders as ordinary income or long-term capital gain may be increased as
compared to a fund that did not engage in transactions involving Section 1256
contracts or constructive sales.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
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For purposes of the excise tax, a regulated investment company shall
(a) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year, and (b) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
in the event that the Internal Revenue Service determines that a Fund is using
an improper method of allocation for purposes of equalization accounting (as
discussed above), such Fund may be liable for excise tax. Moreover, investors
should note that a Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
SWAP AGREEMENTS
Each 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
( the "IRS") 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.
INVESTMENT IN PASSIVE FOREIGN INVESTMENT COMPANIES
Each 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.
Each Fund may elect alternative tax treatment with respect to PFIC
shares. Under one such election (the "QEF Election") 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. Alternatively, each Fund may make an election to mark any shares
of PFIC stock that it holds to market (the "Section 1296 Election"). If the
Section 1296 Election is made with respect to any PFIC stock, a Fund will
recognize ordinary income to the extent that the fair market value of such PFIC
stock at the close of any taxable year exceeds its adjusted basis and will also
recognize ordinary income in the event that it disposes of any shares of such
PFIC stock at a gain. In each case, such ordinary income will be treated as
dividend income for purposes of the Income Requirement. A Fund making the
Section 1296 Election with respect to any PFIC stock will similarly recognize a
deductible ordinary loss to the extent that the adjusted basis of such PFIC
stock exceeds its fair market value at the close of any taxable year and will
also recognize a deductible ordinary loss in the event that it disposes of such
PFIC stock at a loss. However, the amount of any ordinary loss recognized by a
Fund making a Section 1296 Election with respect to any PFIC stock may not
exceed the amount of ordinary income previously recognized by such Fund by
reason of marking such PFIC stock to market. If either the QEF Election or the
Section 1296 Election is made, the special rules, discussed above, relating to
the taxation of excess distributions, would not
50
<PAGE> 123
apply. A Fund's intention to qualify annually as a regulated investment company
may limit its ability to invest and hold 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.
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 amount, 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 in
accordance with the guidance that has been provided by the IRS.
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.
51
<PAGE> 124
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 Fund 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. Except to the extent otherwise provided in future Treasury
regulations, any long-term capital gain recognized by a non-corporate
shareholder will be subject to tax at a maximum rate of 20%. 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 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.
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. The tax effects discussed hereunder are those in effect
on May 1, 2000. Future tax law changes may change the effects discussed herein.
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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
The Advisor or sub-advisor make decisions to buy and sell securities
for each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
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<PAGE> 125
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and the AIM Funds in particular, including sales of
the Funds and of the other AIM Funds. In connection with (3) above, the Funds'
trades may be executed directly by dealers that sell shares of the AIM Funds or
by other broker-dealers with which such dealers have clearing arrangements. AIM
will not use a specific formula in connection with any of these considerations
to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of an AIM Fund, provided the conditions of an exemptive order
received by the Funds from the SEC are met. In addition, a Fund may purchase or
sell a security from or to another AIM Fund or account provided the Funds follow
procedures adopted by the Board of Directors/Trustees of the various AIM Funds,
including the Company. These inter-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related expenses.
Under the 1940 Act, certain persons affiliated with the Company are
prohibited from dealing with the funds as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Company are members except in accordance with certain conditions.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM
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<PAGE> 126
must make a good faith determination that the commissions paid are "reasonable
in relation to the value of the brokerage and research services provided ...
viewed in terms of either that particular transaction or [AIM's] overall
responsibilities with respect to the accounts as to which it exercises
investment discretion." The services provided by the broker also must lawfully
and appropriately assist AIM in the performance of its investment
decision-making responsibilities. Accordingly, in recognition of research
services provided to it, a Fund may pay a broker higher commissions than those
available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Company's directors with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Broker-dealers may communicate such information electronically, orally in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds. However, the Funds are not under any obligation to deal
with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended December 31, 1999, 1998 and 1997, the LARGE
CAP VALUE FUND paid total brokerage commissions of $209,199, $269,546 and
$139,516, respectively. For the fiscal year ended December 31, 1999, 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 $17,435,636, and the related
commissions were $19,184. For the fiscal years ended December 31, 1999, 1998 and
1997, the FLEX FUND paid total brokerage commissions of $492,276, $291,570 and
$166,653, respectively. For the fiscal year ended December 31, 1999, 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 $46,040,822, and the related
commissions were $60,141. For the fiscal years ended December 31, 1999, 1998,
and 1997, the REAL ESTATE FUND paid total brokerage commissions of $157,871,
$256,164 and $115,951, respectively. For the fiscal year ended December 31,
1999, AIM allocated certain of REAL ESTATE FUND'S brokerage transactions to
certain broker-dealers that provide AIM with certain
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<PAGE> 127
research, statistical and other information. Such transactions amounted to
$11,617,438 and the related commissions were $33,118. For the fiscal years ended
December 31, 1999, 1998 and 1997, the INTERNATIONAL VALUE FUND paid total
brokerage commissions of $82,505, $42,855 and $44,731, respectively. For the
fiscal year ended December 31, 1999, 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 $585,747, and the related commissions were $1,464. There were no
brokerage commissions paid to affiliated broker-dealers during the fiscal years
ended December 31, 1999,1998 and 1997, by any of the Funds.
At December 31, 1999, 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, 1999
- ---- ---------------- --------------------
<S> <C> <C>
LARGE CAP VALUE FUND Morgan Stanley Dean Witter & Co. $ 2,876,413
FLEX FUND Morgan Stanley Dean Witter & Co. 11,420,000
</TABLE>
During the fiscal years ended December 31, 1999, 1998 and 1997, the
LARGE CAP VALUE FUND'S portfolio turnover rates were 44%, 52% and 34%,
respectively; the FLEX FUND'S portfolio turnover rates were 55%, 34% and 17%,
respectively; the REAL ESTATE FUND'S portfolio turnover rates were 52%, 69% and
57%, respectively; the INTERNATIONAL VALUE FUND'S portfolio turnover rates were
24%, 9% and 9%, respectively.
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 has
made an election under Rule 18f-1 under the 1940 Act, which obligates the Fund
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.
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. From time to time, AIM or its affiliates may waive all or a portion
of their fees and/or assume certain expenses of any Fund. Voluntary fee waivers
or reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
the Prospectuses may not be terminated or amended to the Fund's detriment during
the period stated in the agreement between AIM and the Fund. Fee waivers or
reductions or commitments to reduce expenses will have the effect of increasing
that Fund's yield and total return.
The performance of each Fund will vary from time to time and past
results are not necessarily indicative of future results. A Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
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
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<PAGE> 128
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, 1999, the yield for Class A
shares, Class B shares and Class C shares of REAL ESTATE FUND were 5.39%, 4.79%
and 4.80%, 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 short-term 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 yields for the 30-day period ended December 31, 1999, for
Class A shares, Class B shares and Class C shares of REAL ESTATE FUND were
5.60%, 4.79% and 4.80%, respectively.
The distribution yields (including income and short-term capital gains
distributions) for the 365-day period ended December 31, 1999, for Class A
shares, Class B shares and Class C shares of REAL ESTATE FUND were 4.92%, 4.11%
and 4.12%, respectively.
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.
Average annual total return may be calculated without assuming payment
of the full sales load according to the following formula:
n
P(1+U) =ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming
payment of only a stated portion of, or
none of, the applicable maximum sales load
at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the stated
period.
</TABLE>
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<PAGE> 129
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, 1999, for Class A
shares of each of the following Funds for the periods listed below are as
follows:
<TABLE>
<CAPTION>
Fund 1 Year Since Inception*
---- ------ ---------------
<S> <C> <C>
LARGE CAP VALUE FUND -5.52% 12.37%
FLEX FUND -6.32% 9.76%
REAL ESTATE FUND -7.48% -4.96%
INTERNATIONAL VALUE FUND 15.83% 13.60%
</TABLE>
* From December 31, 1996 (commencement of operations) (3 years).
The average annual total return as of December 31, 1999, for Class B
shares of each of the following Funds for the period listed below is as follows:
<TABLE>
<CAPTION>
Fund 1 Year Since Inception*
---- ------ ---------------
<S> <C> <C>
LARGE CAP VALUE FUND -5.08% 1.26%
FLEX FUND -5.89% 1.22%
REAL ESTATE FUND -8.17% -15.54%
INTERNATIONAL VALUE FUND 16.70% 10.34%
</TABLE>
* From March 3, 1998 (commencement of operations) (1 year, 9 months)
The average annual total return as of December 31, 1999, for shares now
designated as Class C shares of each of the following Funds for the periods
listed below are as follows:
<TABLE>
<CAPTION>
Since
Fund 1 Year 5 Years 10 Years Inception
- ---- ------ ------- -------- ---------
<S> <C> <C> <C> <C>
LARGE CAP VALUE FUND -1.58% 17.51% 12.97% 13.59%*
FLEX FUND -2.44% 14.63% 11.27% 11.23%**
REAL ESTATE FUND -4.47% N/A N/A 5.99%***
INTERNATIONAL VALUE FUND 20.64% N/A N/A 16.53%***
</TABLE>
* From February 15, 1984 (commencement of operations) (15 years, 10
months).
** From February 24, 1988 (commencement of operations) (11 years,
10 months).
*** From May 1, 1995 (commencement of operations) (4 years, 7 months).
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.
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<PAGE> 130
The following table provides the actual total rates of return for Class
A shares of the indicated Funds for the fiscal years ended December 31, 1999,
1998 and 1997.
<TABLE>
<CAPTION>
LARGE REAL INTERNATIONAL
CAP VALUE FLEX ESTATE VALUE
FUND FUND FUND FUND
--------- ---- ------ -------------
<S> <C> <C> <C> <C>
1999 -0.01% -0.85% -2.88% 22.54%
1998 14.07% 13.26% -22.54% 11.20%
1997* 31.66% 24.60% 19.78% 13.84%
</TABLE>
* Period December 31, 1996 (commencement of operation) through December
31, 1997.
The following table provides the actual total rates of return for Class
B shares of the indicated Funds for the fiscal years ended December 31, 1999 and
1998.
<TABLE>
<CAPTION>
LARGE REAL INTERNATIONAL
CAP VALUE FLEX ESTATE VALUE
FUND FUND FUND FUND
--------- ---- ------ -------------
<S> <C> <C> <C> <C>
1999 -0.75% -1.50% -3.53% 21.70%
1998* 6.51% 7.25% -21.02% 1.67%
</TABLE>
* Period March 3, 1998 (commencement of operation) through December 31,
1998.
The following table provides the actual total rates of return for Class
C shares of the indicated Funds for the fiscal years ended December 31, 1999,
1998, 1997, 1996, 1995, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
LARGE REAL INTERNATIONAL
CAP VALUE FLEX ESTATE VALUE
FUND FUND FUND FUND
--------- ---- ------ -------------
<S> <C> <C> <C> <C>
1999 -0.71% -1.56% -3.54% 21.64%
1998 13.15% 12.41% -23.16% 10.38%
1997 30.67% 23.64% 18.88% 12.98%
1996 17.17% 13.61% 36.43% 20.99%
1995 30.27% 27.30% 9.12%* 11.28%*
1994 2.70% 0.64% N/A N/A
1993 9.16% 10.48% N/A N/A
1992 4.84% 7.72% N/A N/A
</TABLE>
* Period May 1, 1995 (commencement of operations) through December 31,
1995.
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.
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<PAGE> 131
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus
under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent,
as hereinafter defined. Any loss resulting from the dealer's failure to submit
an order within the prescribed time frame will be borne by that dealer. If a
check used to purchase shares does not clear, or if any investment order must be
canceled due to nonpayment, the investor will be responsible for any resulting
loss to an AIM Fund or to AIM Distributors.
SHARE CERTIFICATES. The AIM Funds will issue share certificates upon
written request to AFS. Otherwise, shares are held on the shareholder's behalf
and recorded on the Fund books. The AIM Funds will not issue certificates for
shares held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all
shares are to be held by the Transfer Agent and all dividends and distributions
are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To
provide funds for payments made under the Systematic Withdrawal Plan, the
Transfer Agent redeems sufficient full and fractional shares at their net asset
value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to
be acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with
certain dealers and investment advisory firms to accept telephone instructions
to exchange shares between any of the AIM Funds. AIM Distributors reserves the
right to impose conditions on dealers or investment advisors who make telephone
exchanges of shares of the funds, including the condition that any such dealer
or investment advisor enter into an agreement (which contains additional
conditions with respect to exchanges of shares) with AIM Distributors. To
exchange shares by telephone, a shareholder, dealer or investment advisor who
has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
shareholder is unable to reach AFS by telephone, he may also request exchanges
by telegraph or use overnight courier services to expedite exchanges by mail,
which will be effective on the business day received by the Transfer Agent as
long as such request is received prior to the close of the customary trading
session of the NYSE. The Transfer Agent and AIM Distributors may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
By signing an account application form, an investor appoints the
Transfer Agent as his true and lawful attorney-in-fact to surrender for
redemption any and all unissued shares held by the Transfer Agent in the
designated account(s), or in any other account with any of the AIM Funds,
present or future, which has the identical registration as the designated
account(s), with full power of substitution in the premises. The Transfer
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<PAGE> 132
Agent and AIM Distributors are thereby authorized and directed to accept and act
upon any telephone redemptions of shares held in any of the account(s) listed,
from any person who requests the redemption proceeds to be applied to purchase
shares in any one or more of the AIM Funds, provided that such fund is available
for sale and provided that the registration and mailing address of the shares to
be purchased are identical to the registration of the shares being redeemed. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone exchange requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transactions. The Transfer Agent reserves the
right to modify or terminate the telephone exchange privilege at any time
without notice. An investor may elect not to have this privilege by marking the
appropriate box on the application. Then any exchanges must be effected in
writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints the Transfer Agent as his true and lawful attorney-in-fact to
surrender for redemption any and all unissued shares held by the Transfer Agent
in the designated account(s), present or future, with full power of substitution
in the premises. The Transfer Agent and AIM Distributors are thereby authorized
and directed to accept and act upon any telephone redemptions of shares held in
any of the account(s) listed, from any person who requests the redemption. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone redemption requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the 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. If the investor so
elects, any redemptions must be effected in writing.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the SEC, and
further provided that such guarantor institution is listed in one of the
reference guides contained in the Transfer Agent's current Signature Guarantee
Standards and Procedures, such as certain domestic banks, credit unions,
securities dealers, or securities exchanges. The Transfer Agent will also accept
signatures with either: (1) a signature guaranteed with a medallion stamp of the
STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE
Medallion Signature Program, provided that in either event, the amount of the
transaction involved does not exceed the surety coverage amount indicated on the
medallion. For information regarding whether a particular institution or
organization qualifies as an "eligible guarantor institution," an investor
should contact the Client Services Department of AFS.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet
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<PAGE> 133
transaction effected in accordance with the instructions set forth in the forms
if they reasonably believe such request to be genuine. Procedures for
verification of internet transactions include requests for confirmation of the
shareholder's personal identification number and mailing of confirmations
promptly after the transactions. The investor also acknowledges that (1) if he
no longer wants the AIM Internet Contract option, he will notify the Transfer
Agent in writing, and (2) the AIM Internet Connect option may be terminated at
any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital
gains, if any, available for distribution, net capital gains are offset against
available net capital losses, if any, carried forward from previous fiscal
periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to the Transfer Agent and are effective
as to any subsequent payment if such notice is received by the Transfer Agent
prior to the record date of such payment. Any dividend and distribution election
remains in effect until the Transfer Agent receives a revised written election
by the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Directors will issue semi-annual reports of the
transactions of the Funds to the shareholders. Financial statements, audited by
independent auditors, will be issued annually. The firm of KPMG LLP, 700
Louisiana, Houston, Texas 77002, currently serves as the auditors of each Fund.
LEGAL MATTERS
Legal matters for the Company have been passed upon by Ballard Spahr
Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. The custodian attends to the collection of principal and income, pays
and collects all monies for securities bought and sold by the Funds and performs
certain other ministerial duties. A I M Fund Services, Inc. (the "Transfer
Agent"), a wholly owned subsidiary of AIM, P.O.
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<PAGE> 134
Box 4739, Houston, Texas 77210-4739, acts as transfer and dividend disbursing
agent for the Funds. These services do not include any supervisory function over
management or provide any protection against any possible depreciation of
assets. The Funds pay the Custodian and the Transfer Agent such compensation as
may be agreed upon from time to time.
Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as
Sub-Custodian for retail purchase of the AIM Funds.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has
entered into an agreement with the Company (and certain other AIM Funds), First
Data Investor Service Group and Financial Data Services, Inc., pursuant to which
MLPF&S has agreed to perform certain shareholder sub-accounting services for its
customers who beneficially own shares of the Fund(s).
PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 2000, the following entities owned of record or
beneficially 5% or more of the shares of a Fund:
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ------------------- -------- ------------
<S> <C> <C>
CLASS A
LARGE CAP VALUE FUND
James L. Cash -0- 5.03%
5703 155th Ave. NE
Redmond, WA 98052
FLEX FUND
Cypress Enterprises -0- 8.40%
A Partnership
730 S. Tonti Street
New Orleans, LA 70119
</TABLE>
- -------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
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<PAGE> 135
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ------------------- -------- ------------
<S> <C> <C>
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 19.14%** -0-
FBO the Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
Commerce Bank FBO 8.05% -0-
Baker University Endowment
8th and Grove
Baldwin City, KS 66006
Mulvihill Family Trust -0- 7.35%
DTD 10/1/73, Willard Thompson Trust
c/o Bessemer Trust Company
100 Woodbridge Center Drive
Woodbridge, NJ 07095
Salomon Smith Barney Inc. 6.01% -0-
00165249542
388 Greenwich Street
New York, NY 10013
The W.W. Williams Company 5.17% -0-
Employee Pension Trust
INVESCO/Vanguard
835 W. Goodale Blvd.
Columbus, OH 43212
CLASS B
LARGE CAP VALUE FUND
Merrill Lynch Pierce Fenner & Smith 7.90% -0-
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 10.75% -0-
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 19.79% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
- -------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a
Fund may be presumed to be in "control" of such Fund as defined in the
1940 Act.
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<PAGE> 136
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ------------------- -------- ------------
<S> <C> <C>
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 34.94%** -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
CLASS C
LARGE CAP VALUE FUND
Merrill Lynch Pierce Fenner & Smith 19.53% -0-
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 11.81% -0-
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 5.14% -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
- -------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a
Fund may be presumed to be in "control" of such Fund as defined in the
1940 Act.
64
<PAGE> 137
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ------------------- -------- ------------
<S> <C> <C>
INTERNATIONAL VALUE FUND
Merrill Lynch Pierce Fenner & Smith 57.98%** -0-
FBO the Sole Benefit of Its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
</TABLE>
As of March 31, 2000, the officers and directors of the Company, as a
group, owned less than 1% of the outstanding shares of the Funds.
- --------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a
Fund may be presumed to be in "control" of such Fund as defined in the
1940 Act.
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<PAGE> 138
APPENDIX
Some of the terms used in the Funds' Prospectuses 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, bankers' acceptances and master
notes, 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
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<PAGE> 139
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).
RATINGS OF CORPORATE DEBT OBLIGATIONS 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 standards for investment
grade obligations are generally similar to those standards included in the four
highest categories by Moody's and 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.
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.
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<PAGE> 140
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. 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
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<PAGE> 141
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.
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FINANCIAL STATEMENTS
FS
<PAGE> 143
INDEPENDENT AUDITORS REPORT
The Board of Trustees and Shareholders of
AIM Advisor Flex Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor Flex Fund (a portfolio of AIM
Advisor Funds, Inc.), including the schedule of
investments, as of December 31, 1999, and the related
statement of operations for the year then ended, and the
statement of changes in net assets and the financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express and opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the 1999 financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Advisor Flex Fund as of December 31, 1999, the results of
its operations for the year then ended, and the changes
in its net assets and the financial highlights for each
of the years in the two-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-1
<PAGE> 144
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-72.48%
AEROSPACE/DEFENSE-1.52%
Boeing Co. (The) 65,000 $ 2,701,562
- --------------------------------------------------------------
Lockheed Martin Corp. 150,000 3,281,250
- --------------------------------------------------------------
Precision Castparts Corp. 154,500 4,055,625
- --------------------------------------------------------------
10,038,437
- --------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.37%
Archer-Daniels-Midland Co. 200,000 2,437,500
- --------------------------------------------------------------
AIRLINES-0.71%
Southwest Airlines Co. 288,525 4,670,498
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-1.56%
Cooper Tire & Rubber Co. 160,000 2,490,000
- --------------------------------------------------------------
Genuine Parts Co. 180,000 4,466,250
- --------------------------------------------------------------
Snap-on, Inc. 125,000 3,320,312
- --------------------------------------------------------------
10,276,562
- --------------------------------------------------------------
AUTOMOBILES-0.99%
Ford Motor Co. 121,600 6,498,000
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.42%
Bank One Corp. 185,000 5,931,562
- --------------------------------------------------------------
FleetBoston Financial Corp. 100,000 3,481,250
- --------------------------------------------------------------
National City Corp. 275,000 6,514,062
- --------------------------------------------------------------
15,926,874
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.04%
Bank of America Corp. 150,000 7,528,125
- --------------------------------------------------------------
First Union Corp. 180,000 5,906,250
- --------------------------------------------------------------
13,434,375
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.54%
Anheuser Busch Co., Inc. 50,000 3,543,750
- --------------------------------------------------------------
CHEMICALS-1.18%
Praxair, Inc. 35,000 1,760,937
- --------------------------------------------------------------
Dow Chemical Co. (The) 45,000 6,013,125
- --------------------------------------------------------------
7,774,062
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.43%
Great Lakes Chemical Corp. 75,000 2,864,062
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-3.38%
Compaq Computer Corp. 250,000 6,765,625
- --------------------------------------------------------------
Hewlett-Packard Co. 70,000 7,975,625
- --------------------------------------------------------------
International Business Machines
Corp. 70,000 7,560,000
- --------------------------------------------------------------
22,301,250
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-2.59%
Cadence Design Systems, Inc.(a) 125,000 $ 3,000,000
- --------------------------------------------------------------
Computer Associates International,
Inc. 148,000 10,350,750
- --------------------------------------------------------------
Compuware Corp.(a) 100,000 3,725,000
- --------------------------------------------------------------
17,075,750
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES &
GIFTS)-0.36%
American Greetings Corp.-Class A 100,000 2,362,500
- --------------------------------------------------------------
CONSUMER FINANCE-0.28%
Household International, Inc. 50,000 1,862,500
- --------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.51%
Crown Cork & Seal Co., Inc. 150,000 3,356,250
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.86%
SUPERVALU, INC. 285,000 5,700,000
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.64%
DTE Energy Co. 75,000 2,353,125
- --------------------------------------------------------------
Entergy Corp. 255,000 6,566,250
- --------------------------------------------------------------
GPU, Inc. 200,000 5,987,500
- --------------------------------------------------------------
Teco Energy, Inc. 135,000 2,505,937
- --------------------------------------------------------------
17,412,812
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.84%
Emerson Electric Co. 50,000 2,868,750
- --------------------------------------------------------------
General Electric Co. 35,000 5,416,250
- --------------------------------------------------------------
Rockwell International Corp. 80,000 3,830,000
- --------------------------------------------------------------
12,115,000
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.43%
W.W. Grainger, Inc. 60,000 2,868,750
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.32%
Raytheon Co.-Class A 85,000 2,109,062
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.44%
Intel Corp. 35,000 2,880,937
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.78%
American General Corp. 90,000 6,828,750
- --------------------------------------------------------------
Fannie Mae 40,000 2,497,500
- --------------------------------------------------------------
MGIC Investment Corp. 150,000 9,028,125
- --------------------------------------------------------------
18,354,375
- --------------------------------------------------------------
FOODS-0.75%
Sara Lee Corp. 100,000 2,206,250
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 145
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOODS-(CONTINUED)
H.J. Heinz Co. 69,000 $ 2,747,063
- --------------------------------------------------------------
4,953,313
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.96%
Abbott Laboratories 204,500 7,425,906
- --------------------------------------------------------------
American Home Products Corp. 100,000 3,943,750
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 24,000 1,540,500
- --------------------------------------------------------------
12,910,156
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.67%
Mylan Laboratories, Inc. 175,000 4,407,813
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-2.51%
Lilly (Eli) & Co. 50,000 3,325,000
- --------------------------------------------------------------
Merck & Co., Inc. 130,000 8,718,125
- --------------------------------------------------------------
Schering-Plough Corp. 107,200 4,522,500
- --------------------------------------------------------------
16,565,625
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.78%
Columbia/HCA Healthcare Corp. 175,000 5,129,688
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.37%
Quintiles Transnational Corp.(a) 130,000 2,429,375
- --------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-0.74%
Whirlpool Corp. 75,000 4,879,688
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.49%
Kimberly-Clark Corp. 50,000 3,262,500
- --------------------------------------------------------------
HOUSEWARES-0.25%
Fortune Brands, Inc. 50,000 1,653,125
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.35%
Torchmark Corp. 80,000 2,325,000
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.74%
Loews Corp. 80,000 4,855,000
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-3.55%
Allstate Corp. (The) 230,000 5,520,000
- --------------------------------------------------------------
Ohio Casualty Corp. 350,000 5,621,875
- --------------------------------------------------------------
Old Republic International Corp. 200,000 2,725,000
- --------------------------------------------------------------
SAFECO Corp. 140,000 3,482,500
- --------------------------------------------------------------
St. Paul Co., Inc. (The) 180,000 6,063,750
- --------------------------------------------------------------
23,413,125
- --------------------------------------------------------------
INSURANCE BROKERS-1.16%
Marsh & McLennan Cos. Inc. 80,000 7,655,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT BANKING/BROKERAGE-1.73%
Morgan Stanley Dean Witter & Co. 80,000 $ 11,420,000
- --------------------------------------------------------------
IRON & STEEL-0.96%
Nucor Corp. 115,000 6,303,438
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.20%
Mattel, Inc. 100,000 1,312,500
- --------------------------------------------------------------
LODGING-HOTELS-0.08%
Host Marriott Corp. 62,000 511,500
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.93%
Caterpillar, Inc. 100,000 4,706,250
- --------------------------------------------------------------
Deere & Co. 90,000 3,903,750
- --------------------------------------------------------------
Dover Corp. 90,000 4,083,750
- --------------------------------------------------------------
12,693,750
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-3.34%
Illinois Tool Works, Inc. 74,000 4,999,625
- --------------------------------------------------------------
Minnesota Mining and Manufacturing Co. 35,000 3,425,625
- --------------------------------------------------------------
National Service Industries, Inc. 100,000 2,950,000
- --------------------------------------------------------------
United Technologies Corp. 50,000 3,250,000
- --------------------------------------------------------------
Johnson Controls, Inc. 90,000 5,118,750
- --------------------------------------------------------------
Textron, Inc. 30,000 2,300,625
- --------------------------------------------------------------
22,044,625
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.91%
Federal Signal Corp. 160,000 2,570,000
- --------------------------------------------------------------
York International Corp. 124,600 3,418,713
- --------------------------------------------------------------
5,988,713
- --------------------------------------------------------------
METALS MINING-0.71%
Phelps Dodge Corp. 70,000 4,698,750
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.36%
Phillips Petroleum Co. 50,000 2,350,000
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-1.19%
Exxon Mobil Corp. 97,400 7,846,788
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.46%
Westvaco Corp. 93,400 3,047,175
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.95%
IKON Office Solutions, Inc. 340,000 2,316,250
- --------------------------------------------------------------
Xerox Corp. 175,000 3,970,313
- --------------------------------------------------------------
6,286,563
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.87%
Gannett Co., Inc. 70,000 5,709,375
- --------------------------------------------------------------
RAILROADS-0.52%
CSX Corp. 110,000 3,451,250
- --------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 146
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS-4.00%
Arden Realty Group, Inc. 75,200 $ 1,508,700
- --------------------------------------------------------------
Avalonbay Communities, Inc. 59,100 2,027,869
- --------------------------------------------------------------
Beacon Capital 60,000 720,000
- --------------------------------------------------------------
Beacon Capital Voting Trust 2,705 254,543
- --------------------------------------------------------------
CarrAmerica Realty Corp. 57,300 1,210,463
- --------------------------------------------------------------
CBL & Associates Properties, Inc. 39,800 820,875
- --------------------------------------------------------------
Charles E. Smith Residential
Realty, Inc. 21,800 771,175
- --------------------------------------------------------------
Duke-Weeks Realty Corp. 60,000 1,170,000
- --------------------------------------------------------------
Equity Office Properties Trust 90,979 2,240,358
- --------------------------------------------------------------
Equity Residential Properties Trust 55,100 2,352,081
- --------------------------------------------------------------
First Industrial Realty Trust, Inc. 41,500 1,138,656
- --------------------------------------------------------------
Highwoods Properties, Inc. 46,800 1,088,100
- --------------------------------------------------------------
Hospitality Properties Trust 45,700 871,156
- --------------------------------------------------------------
Kimco Realty Corp. 34,200 1,158,525
- --------------------------------------------------------------
Liberty Property Trust 67,500 1,636,875
- --------------------------------------------------------------
New Plan Excel Realty Trust 35,060 554,386
- --------------------------------------------------------------
Prentiss Properties Trust 85,100 1,787,100
- --------------------------------------------------------------
Public Storage, Inc. 95,400 2,164,388
- --------------------------------------------------------------
Simon Property Group, Inc. 73,500 1,685,906
- --------------------------------------------------------------
Vornado Realty Trust 36,700 1,192,750
- --------------------------------------------------------------
26,353,906
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.07%
Lowe's Cos., Inc. 50,000 2,987,500
- --------------------------------------------------------------
Sherwin-Williams Co. 195,000 4,095,000
- --------------------------------------------------------------
7,082,500
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.04%
Dillards, Inc.-Class A 190,000 3,835,625
- --------------------------------------------------------------
J.C. Penney Co., Inc. 150,000 2,990,625
- --------------------------------------------------------------
6,826,250
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.68%
Rite Aid Corp. 400,000 4,475,000
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.37%
Albertson's, Inc. 75,000 2,418,750
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.25%
Office Depot, Inc.(a) 150,000 1,640,625
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.45%
First Data Corp. 60,000 2,958,750
- --------------------------------------------------------------
SPECIALTY PRINTING-0.77%
Deluxe Corp. 183,900 5,045,756
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.54%
AT&T Corp. 200,000 10,150,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-2.29%
Bell Atlantic Corp. 80,000 $ 4,925,000
- --------------------------------------------------------------
SBC Communications, Inc. 150,000 7,312,500
- --------------------------------------------------------------
US West, Inc. 40,000 2,880,000
- --------------------------------------------------------------
15,117,500
- --------------------------------------------------------------
TEXTILES (APPAREL)-1.45%
Liz Claiborne, Inc. 135,000 5,079,375
- --------------------------------------------------------------
VF Corp. 150,000 4,500,000
- --------------------------------------------------------------
9,579,375
- --------------------------------------------------------------
TEXTILES (SPECIALTY)-0.37%
Unifi, Inc.(a) 200,000 2,462,500
- --------------------------------------------------------------
TOBACCO-0.79%
Philip Morris Cos. Inc. 225,000 5,217,188
- --------------------------------------------------------------
WASTE MANAGEMENT-0.69%
Waste Management, Inc. 265,000 4,554,688
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $392,397,411) 477,849,929
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-5.17%
MEXICO-1.19%
Telefonos de Mexico S.A.-ADR
(Telephone) 70,000 7,875,000
- --------------------------------------------------------------
NETHERLANDS-0.75%
Unilever N.V.-ADR (Foods) 90,249 4,912,930
- --------------------------------------------------------------
NORWAY-0.88%
Norsk Hydro A.S.A.-ADR
(Manufacturing- Diversified) 135,000 5,771,250
- --------------------------------------------------------------
SPAIN-1.68%
Repsol S.A.-ADR (Oil-International
Integrated) 475,000 11,043,750
- --------------------------------------------------------------
UNITED KINGDOM-0.67%
Hanson PLC-ADR
(Manufacturing-Diversified) 110,000 4,448,125
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$18,887,089) 34,051,055
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CORPORATE BONDS & NOTES-12.97%
AUTOMOBILES-1.25%
Ford Motor Co., Unsec. Bonds,
6.50%, 08/01/18 $3,250,000 2,877,582
- --------------------------------------------------------------
General Motors Acceptance Corp.,
Unsec. Bonds, 5.50%, 01/14/02 5,500,000 5,344,845
- --------------------------------------------------------------
8,222,427
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.89%
Bank of America Corp., Notes,
6.63%, 06/15/04 5,000,000 4,890,750
- --------------------------------------------------------------
National City Corp., Sub. Notes,
7.20%, 05/15/05 1,000,000 989,810
- --------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 147
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BANKS (MAJOR REGIONAL)-(CONTINUED)
Nationsbank Corp., Sr. Notes,
5.38%, 04/15/00 $1,550,000 $ 1,546,776
- --------------------------------------------------------------
Wachovia Corp., Unsec. Sub. Notes,
6.25%, 08/04/08 5,500,000 5,069,240
- --------------------------------------------------------------
12,496,576
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.73%
Anheuser-Busch Cos. Inc., Unsec.
Notes, 5.38%, 09/15/08 5,500,000 4,828,890
- --------------------------------------------------------------
BUILDING MATERIALS-0.75%
Masco Corp., Unsec. Deb., 7.75%,
08/01/29 5,000,000 4,938,150
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.31%
Diageo Capital PLC, Unsec. Gtd.
Notes, 6.63%, 06/24/04 4,000,000 3,917,864
- --------------------------------------------------------------
Motorola, Inc., Notes, 6.50%,
03/01/08 5,000,000 4,738,300
- --------------------------------------------------------------
8,656,164
- --------------------------------------------------------------
CONSUMER FINANCE-1.33%
Beneficial Corp., Medium Term
Series I Notes, 6.63%, 09/27/04 3,000,000 2,871,870
- --------------------------------------------------------------
Commercial Credit Co., Unsec.
Notes, 5.55%, 02/15/01 3,000,000 2,959,470
- --------------------------------------------------------------
Ford Motor Credit Co., Sr. Unsec.
Notes, 5.13%, 10/15/01 3,000,000 2,909,931
- --------------------------------------------------------------
8,741,271
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.56%
Penn Power & Lighting, First
Mortgage Notes, 6.55%, 03/01/06 3,900,000 3,715,296
- --------------------------------------------------------------
FOODS-0.67%
Bestfoods, Notes, 6.63%, 04/15/28 5,000,000 4,399,100
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.28%
Guidant Corp., Notes, 6.15%,
02/15/06 2,000,000 1,837,080
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.32%
Travelers Property Casualty Corp.,
Sr. Unsec. Notes, 6.75%, 11/15/06 2,200,000 2,110,218
- --------------------------------------------------------------
INSURANCE BROKERS-0.74%
Marsh & McLennan Cos. Inc., Sr.
Unsec. Notes, 6.63%, 06/15/04 5,000,000 4,886,100
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.77%
Atlantic Richfield Co., Notes,
5.55%, 04/15/03 5,300,000 5,082,594
- --------------------------------------------------------------
RAILROADS-0.68%
Norfolk Southern Corp., Sr. Unsec.
Notes, 6.20%, 04/15/09 5,000,000 4,504,670
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.45%
Sherwin-Williams Co., Notes, 6.50%,
02/01/02 3,000,000 2,964,630
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (DISCOUNTERS)-0.82%
Wal-Mart Stores, Inc., Sr. Unsec.
Notes, 6.55%, 08/10/04 $5,500,000 $ 5,402,485
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.42%
AT&T Corp., Notes, 6.50%, 03/15/29 3,200,000 2,750,624
- --------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $89,114,354) 85,536,275
- --------------------------------------------------------------
ASSET-BACKED SECURITIES-0.36%
SERVICES (COMMERCIAL & CONSUMER)-0.36%
Discover Card Master Trust I,
Series. 1998-7 A, 5.60%, 05/16/06
(Cost $2,523,340) 2,500,000 2,382,813
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-6.00%
FEDERAL HOME LOAN BANK-1.29%
Debentures
5.165%, 04/12/01 1,000,000 984,310
- --------------------------------------------------------------
Disc. Notes,
1.50%, 01/03/00(b) 529,000 528,956
- --------------------------------------------------------------
Sr. Unsec. Unsub. Notes
5.50%, 07/14/00 7,000,000 6,978,510
- --------------------------------------------------------------
8,491,776
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-2.55%
Pass Through Certificates
6.50%, 07/01/01 to 05/01/29 5,382,998 5,136,553
- --------------------------------------------------------------
8.00%, 10/01/10 1,007,527 1,028,303
- --------------------------------------------------------------
5.50%, 01/01/14 3,791,232 3,528,196
- --------------------------------------------------------------
6.00%, 01/01/29 7,762,978 7,122,532
- --------------------------------------------------------------
16,815,584
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-1.57%
Pass Through Certificates
8.50%, 03/01/10 904,828 933,665
- --------------------------------------------------------------
6.50%, 06/01/11 to 05/01/26 5,030,402 4,823,878
- --------------------------------------------------------------
7.50%, 11/01/26 to 05/01/29 4,685,919 4,641,791
- --------------------------------------------------------------
10,399,334
- --------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-0.59%
Pass Through Certificates
6.50%, 10/15/08 711,791 696,437
- --------------------------------------------------------------
7.00%, 10/15/08 728,732 724,403
- --------------------------------------------------------------
6.00%, 11/15/08 852,885 815,298
- --------------------------------------------------------------
7.50%, 03/15/26 1,651,987 1,640,621
- --------------------------------------------------------------
3,876,759
- --------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost $40,475,868) 39,583,453
- --------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 148
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-3.39%
U.S. TREASURY BONDS-2.81%
9.25%, 02/15/16 $1,000,000 $ 1,234,120
- --------------------------------------------------------------
7.25%, 08/15/22 8,000,000 8,428,160
- --------------------------------------------------------------
7.625%, 02/15/25 8,000,000 8,862,640
- --------------------------------------------------------------
18,524,920
- --------------------------------------------------------------
U.S. TREASURY NOTES-0.58%
6.25%, 02/15/03 1,000,000 997,390
- --------------------------------------------------------------
9.375%, 02/15/06 2,500,000 2,852,525
- --------------------------------------------------------------
3,849,915
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $23,232,422) 22,374,835
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.37% (Cost
$566,630,484) 661,778,360
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.37%) (2,466,184)
- --------------------------------------------------------------
NET ASSETS-100.00% $659,312,176
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Deb. - Debentures
Disc. - Discount
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
FS-6
<PAGE> 149
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$566,630,484) $661,778,360
- ---------------------------------------------------------
Cash 710,099
- ---------------------------------------------------------
Receivables for:
Capital stock sold 173,662
- ---------------------------------------------------------
Interest and dividends 3,727,457
- ---------------------------------------------------------
Investment for deferred compensation plan 26,134
- ---------------------------------------------------------
Other assets 51,659
- ---------------------------------------------------------
Total assets 666,467,371
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 4,910,428
- ---------------------------------------------------------
Deferred compensation plan 26,134
- ---------------------------------------------------------
Accrued advisory fees 430,963
- ---------------------------------------------------------
Accrued distribution fees 1,650,981
- ---------------------------------------------------------
Accrued transfer agent fees 24,062
- ---------------------------------------------------------
Accrued operating expenses 112,627
- ---------------------------------------------------------
Total liabilities 7,155,195
- ---------------------------------------------------------
Net assets applicable to shares outstanding $659,312,176
- ---------------------------------------------------------
NET ASSETS:
Class A $ 39,194,936
=========================================================
Class B $ 10,075,882
=========================================================
Class C $610,041,358
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 2,230,312
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 572,966
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 34,692,912
=========================================================
Class A:
Net asset value and redemption price per
share $ 17.57
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $17.57 divided
by 94.50%) $ 18.59
=========================================================
Class B:
Net asset value and offering price per
share $ 17.59
=========================================================
Class C:
Net asset value and offering price per
share $ 17.58
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 13,196,366
- ---------------------------------------------------------
Dividends (net of $195,724 foreign
withholding tax) 12,609,266
- ---------------------------------------------------------
Total investment income 25,805,632
- ---------------------------------------------------------
EXPENSES:
Advisory fees 5,635,894
- ---------------------------------------------------------
Administrative services fees 64,957
- ---------------------------------------------------------
Custodian fees 37,789
- ---------------------------------------------------------
Operating services fees 1,606,380
- ---------------------------------------------------------
Distribution fees-Class A 159,420
- ---------------------------------------------------------
Distribution fees-Class B 91,305
- ---------------------------------------------------------
Distribution fees-Class C 6,967,734
- ---------------------------------------------------------
Directors' fees and expenses 8,750
- ---------------------------------------------------------
Transfer Agent fees-Class A 17,905
- ---------------------------------------------------------
Transfer Agent fees-Class B 10,056
- ---------------------------------------------------------
Transfer Agent fees-Class C 184,755
- ---------------------------------------------------------
Other 87,966
- ---------------------------------------------------------
Total expenses 14,872,911
- ---------------------------------------------------------
Less: Fees waived by advisor (1,208,175)
- ---------------------------------------------------------
Expenses paid indirectly (4,752)
- ---------------------------------------------------------
Net expenses 13,659,984
- ---------------------------------------------------------
Net investment income 12,145,648
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities 98,684,082
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (110,583,574)
- ---------------------------------------------------------
Net gain (loss) from investment
securities (11,899,492)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 246,156
=========================================================
</TABLE>
FS-7
<PAGE> 150
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 12,145,648 $ 8,482,076
- -----------------------------------------------------------------------------------------
Net realized gain from investment securities 98,684,082 59,176,179
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (110,583,574) 11,782,197
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 246,156 79,440,452
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (1,034,236) (693,499)
- -----------------------------------------------------------------------------------------
Class B (160,013) (14,661)
- -----------------------------------------------------------------------------------------
Class C (10,863,435) (7,001,855)
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES:
Class A (3,757,847) (3,877,358)
- -----------------------------------------------------------------------------------------
Class B (958,788) (270,410)
- -----------------------------------------------------------------------------------------
Class C (58,115,071) (56,203,971)
- -----------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (3,267,326) 21,305,857
- -----------------------------------------------------------------------------------------
Class B 7,515,438 3,715,719
- -----------------------------------------------------------------------------------------
Class C 9,573,755 55,402,752
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (60,821,367) 91,803,026
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 720,133,543 628,330,517
- -----------------------------------------------------------------------------------------
End of period $659,312,176 $720,133,543
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $530,444,492 $510,018,210
- -----------------------------------------------------------------------------------------
Undistributed net investment income 952,680 938,111
- -----------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 32,767,128 3,445,772
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 95,147,876 205,731,450
- -----------------------------------------------------------------------------------------
$659,312,176 $720,133,543
=========================================================================================
</TABLE>
See Notes to Financial Statements
FS-8
<PAGE> 151
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Flex Fund (the "Fund") is a series portfolio of AIM Advisor Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four separate portfolios. The
Fund currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve a high total return on investment
through growth of capital and current income, without regard to federal income
tax considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange
(except convertible bonds) is valued at its last sales price on the
exchange where the security is principally traded, or lacking any sales on
a particular day, the security is valued at the closing bid price on that
day. Each security reported on the NASDAQ National Market System is valued
at the last sales price on the valuation date or absent a last sales price,
at the closing bid price. Debt obligations (including convertible bonds)
are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors
such as yield, type of issue, coupon rate and maturity date. Securities for
which market prices are not provided by any of the above methods are valued
based upon quotes furnished by independent sources and are valued at the
last bid price in the case of equity securities and in the case of debt
obligations, the mean between the last bid and asked prices. Securities for
which market quotations are not readily available or are questionable are
valued at fair value as determined in good faith by or under the
supervision of the Company's officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. For purposes of determining net asset value per share,
futures and option contracts generally will be valued 15 minutes after the
close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was decreased by $73,395, undistributed net realized gains decreased by
$6,531,020 and paid-in capital increased by $6,604,415 as a result of
differing book/tax treatment of paydowns, equalization credits and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend
date, and are declared and paid quarterly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
F. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the Fund's
FS-9
<PAGE> 152
average daily net assets. AIM has entered into a sub-advisory agreement with
INVESCO Capital Management, Inc. ("ICM") whereby AIM pays ICM an annual rate of
0.20% of the Fund's average daily net assets.
The Company, pursuant to an operating services agreement with AIM, agreed to
pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. The
agreement provided that AIM pay 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. During the
year ended December 31, 1999, AIM was paid $443,754 under the agreement. As of
June 1, 1998, AIM voluntarily agreed to limit the operating services fees to an
annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $1,162,626.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $64,957 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and service agreement with A I M
Fund Services, Inc. ("AFS"). Pursuant to a transfer agency and service
agreement, the Fund agreed to pay AFS a fee for providing transfer agency and
shareholder services to the Fund. For the period July 1, 1999 through December
31, 1999, AFS was paid $135,055 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $113,871, $91,305 and $6,967,734, respectively,
as compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $45,549 for Class A shares.
AIM Distributors received commissions of $22,488 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $133,285 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,446 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $515 and $4,237, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $4,752 during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-10
<PAGE> 153
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$405,990,945 and $436,537,739, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $150,129,444
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (55,056,781)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 95,072,663
==========================================================================
Cost of investments for tax purposes is $566,705,697.
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 647,940 $ 13,033,761 1,076,842 $ 22,390,887
- ----------------------------------------------------------------------------------------------------------------------
Class B* 289,189 5,853,184 175,059 3,648,126
- ----------------------------------------------------------------------------------------------------------------------
Class C 3,933,740 79,330,393 5,318,582 109,967,149
- ----------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisition**:
Class A 623,953 11,614,157 -- --
- ----------------------------------------------------------------------------------------------------------------------
Class B 256,293 4,785,508 -- --
- ----------------------------------------------------------------------------------------------------------------------
Class C 7,871,114 146,770,808 -- --
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 240,465 4,199,593 223,596 4,399,200
- ----------------------------------------------------------------------------------------------------------------------
Class B* 59,674 1,031,441 14,140 277,225
- ----------------------------------------------------------------------------------------------------------------------
Class C 3,685,888 63,875,426 3,067,888 60,325,811
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,589,802) (32,114,838) (266,823) (5,484,230)
- ----------------------------------------------------------------------------------------------------------------------
Class B* (211,198) (4,154,695) (10,191) (209,632)
- ----------------------------------------------------------------------------------------------------------------------
Class C (14,205,464) (280,402,871) (5,531,566) (114,890,208)
- ----------------------------------------------------------------------------------------------------------------------
1,601,792 $ 13,821,867 4,067,527 $ 80,424,328
======================================================================================================================
</TABLE>
* Class B shares commenced sales on March 3, 1998.
** On June 21, 1999, pursuant to a plan of reorganization and termination, AIM
MultiFlex Fund ("MultiFlex Fund") transferred all of its assets to the Fund.
The Fund assumed all of the liabilities of the MultiFlex Fund. Shareholders
of the MultiFlex Fund were issued full and fractional shares of the
applicable class of the Fund. The acquisition, which was approved by the
shareholders of MultiFlex Fund on June 16, 1999, was accomplished by an
exchange of 8,751,360 shares of the Fund for the 15,054,075 shares then
outstanding of the MultiFlex Fund. Based on the opinion of Fund counsel, the
reorganization qualified as a tax-free reorganization for federal income tax
purposes with no gain or loss recognized to the Funds or its shareholders.
MultiFlex Fund's net assets, including $21,805,397 of unrealized
appreciation, were combined with the Fund for total net assets after the
acquisition of $892,863,343.
FS-11
<PAGE> 154
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998, and for a share of Class C capital stock outstanding during
each of the years in the five-year period ended December 31, 1999.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
-------------------------------- -----------------
1999 1998 1997(b) 1999 1998
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63 $ 20.06 $20.69
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.46 0.39 0.41 0.31 0.22
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net gains (losses) on securities (both realized and
unrealized) (0.68) 2.16 3.63 (0.66) 1.22
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total from investment operations (0.22) 2.55 4.04 (0.35) 1.44
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.48) (0.39) (0.43) (0.33) (0.23)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Distributions from net realized gains (1.79) (1.84) (0.50) (1.79) (1.84)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Total distributions (2.27) (2.23) (0.93) (2.12) (2.07)
- ------------------------------------------------------------ ------- ------- ------- ------- ------
Net asset value, end of period $ 17.57 $ 20.06 $ 19.74 $ 17.59 $20.06
============================================================ ======= ======= ======= ======= ======
Total return(c) (0.85)% 13.26% 24.60% (1.50)% 7.25%
============================================================ ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $39,195 $46,286 $25,151 $10,076 $3,592
============================================================ ======= ======= ======= ======= ======
Ratio of expenses to average net assets(d) 1.13%(e) 1.23% 1.45% 1.86%(e) 2.00%(f)
============================================================ ======= ======= ======= ======= ======
Ratio of net investment income to average net assets(g) 2.30%(e) 1.99% 2.34% 1.57%(e) 1.22%(f)
============================================================ ======= ======= ======= ======= ======
Portfolio turnover rate 55% 34% 17% 55% 34%
============================================================ ======= ======= ======= ======= ======
</TABLE>
(a) Per share information and shares have been restated to
reflect a 4 for 1 stock split, effected in the form of a
300% stock dividend, on November 7, 1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one
year is not annualized.
(d) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements were 1.39%, 1.52% and 1.55% for
1999-1997 for Class A and 2.02% and 2.19% (annualized) for
1999-1998 for Class B.
(e) Ratios are based on average net assets of $45,548,558 and
$9,130,498 for Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of
net investment income to average net assets prior to fee
waivers and/or expense reimbursements were 2.04%, 1.70% and
2.24% for 1999-1997 for Class A and 1.41% and 1.03%
(annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
--------------------------------------------------------
1999(b) 1998 1997(b) 1996 1995
-------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.06 $ 19.74 $ 16.63 $ 15.66 $ 12.63
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.32 0.25 0.30 0.30 0.32
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.68) 2.14 3.60 1.81 3.09
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.36) 2.39 3.90 2.11 3.41
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.33) (0.23) (0.29) (0.29) (0.32)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (1.79) (1.84) (0.50) (0.85) (0.06)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.12) (2.07) (0.79) (1.14) (0.38)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 17.58 $ 20.06 $ 19.74 $ 16.63 $ 15.66
============================================================ ======== ======== ======== ======== ========
Total return(c) (1.56)% 12.41% 23.64% 13.61% 27.30%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $610,041 $670,256 $603,179 $489,918 $399,162
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(d) 1.86%(e) 2.00% 2.20% 2.26% 2.28%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(f) 1.57%(e) 1.22% 1.59% 1.81% 2.28%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 55% 34% 17% 26% 5%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.02% and 2.19% for 1999-1998.
(e) Ratios are based on average net assets of $696,773,444.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 1.41% and 1.03% for 1999-1998.
FS-12
<PAGE> 155
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Advisor International Value Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor International Value Fund (a
portfolio of AIM Advisor Funds, Inc.), including the
schedule of investments, as of December 31, 1999, and the
related statement of operations for the year then ended,
the statement of changes in net assets and the financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Advisor
International Value Fund as of December 31, 1999, the
results of its operations for the year then ended, the
changes in its net assets and the financial highlights
for each of the years in the two-year period then ended,
in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-13
<PAGE> 156
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS-99.58%
AUSTRALIA-5.31%
National Australia Bank Ltd.-ADR
(Banks- Regional) 40,000 $ 3,050,000
- --------------------------------------------------------------
News Corp. Ltd. (The) (Publishing-
Newspapers) 325,000 3,158,035
- --------------------------------------------------------------
Rio Tinto Ltd.-ADR (Metals Mining) 18,000 1,541,565
- --------------------------------------------------------------
7,749,600
- --------------------------------------------------------------
DENMARK-2.23%
Den Danske Bank-ADR (Banks-Money
Center) 15,000 1,636,512
Novo-Nordisk A.S.-ADR (Health
Care-Drugs- Major
Pharmaceuticals) 25,000 1,615,625
- --------------------------------------------------------------
3,252,137
- --------------------------------------------------------------
FRANCE-8.14%
Credit Commercial de France
(Banks-Major Regional) 15,000 1,867,468
- --------------------------------------------------------------
Groupe Danone-ADR (Foods) 40,000 1,862,500
- --------------------------------------------------------------
Michelin-Class B (Automobile/Truck
Parts & Tires)(a) 30,000 1,177,546
- --------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 85,000 3,936,052
- --------------------------------------------------------------
Total Fina S.A.-ADR
(Oil-International Integrated) 43,833 3,035,435
- --------------------------------------------------------------
11,879,001
- --------------------------------------------------------------
GERMANY-8.29%
BASF A.G.-ADR
(Chemicals-Diversified) 60,000 3,067,056
- --------------------------------------------------------------
Bayer A.G.-ADR
(Chemicals-Diversified) 45,000 2,119,873
- --------------------------------------------------------------
DaimlerChrysler A.G. (Automobiles) 23,000 1,799,750
- --------------------------------------------------------------
Deutsche Bank A.G.-ADR (Banks-Money
Center) 36,000 3,025,559
- --------------------------------------------------------------
SAP A.G.-ADR (Computers-Software &
Services) 40,000 2,082,500
- --------------------------------------------------------------
12,094,738
- --------------------------------------------------------------
ITALY-7.75%
Enel S.p.A. (Electric Companies)(a) 300,000 1,256,050
- --------------------------------------------------------------
ENI S.p.A.-ADR (Oil-International
Integrated) 25,000 1,378,125
- --------------------------------------------------------------
San Paolo-IMI S.p.A.-ADR
(Banks-Major Regional) 109,725 3,003,722
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 200,000 2,232,306
- --------------------------------------------------------------
Telecom Italia S.p.A.-ADR
(Telephone) 24,500 3,430,000
- --------------------------------------------------------------
11,300,203
- --------------------------------------------------------------
JAPAN-26.11%
Bank of Tokyo-Mitsubishi Ltd.
(Banks- Regional)(a) 75,000 1,045,777
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Canon, Inc.-ADR (Office Equipment &
Supplies) 75,000 $ 3,042,187
- --------------------------------------------------------------
Fuji Photo Film-ADR
(Photography/Imaging) 50,000 1,912,500
- --------------------------------------------------------------
Hitachi Ltd.-ADR
(Manufacturing-Diversified) 20,000 3,237,500
- --------------------------------------------------------------
Honda Motor Co., Ltd. (Automobiles) 18,000 1,377,000
- --------------------------------------------------------------
Kyocera Corp.-ADR
(Electronics-Component
Distributors) 28,000 7,336,000
- --------------------------------------------------------------
Mitsubishi Heavy Industries, Ltd.
(Manufacturing-Diversified)(a) 300,000 1,001,714
- --------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics- Component
Distributors) 30,000 7,050,184
- --------------------------------------------------------------
Nintendo Co. Ltd. (Leisure
Time-Products) 25,000 4,156,671
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telephone) 150 2,570,379
- --------------------------------------------------------------
Sony Corp-ADR (Electrical
Equipment) 10,000 2,847,500
- --------------------------------------------------------------
Takefuji Corp.
(Financial-Diversified) 20,000 2,504,774
- --------------------------------------------------------------
38,082,186
- --------------------------------------------------------------
NETHERLANDS-9.94%
ABN AMRO Holding N.V. (Banks-Major
Regional) 60,000 1,497,598
- --------------------------------------------------------------
Akzo Nobel N.V.-ADR (Chemicals) 30,000 1,492,500
- --------------------------------------------------------------
ING Groep N.V.-ADR
(Insurance-Life/Health) 60,000 3,660,000
- --------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V.-ADR (Electrical
Equipment) 20,000 2,700,000
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares- ADR (Oil-International
Integrated) 45,000 2,719,687
- --------------------------------------------------------------
Unilever N.V.-ADR (Foods) 44,642 2,430,199
- --------------------------------------------------------------
14,499,984
- --------------------------------------------------------------
PORTUGAL-2.05%
Portugal Telecom S.A.-ADR
(Telephone) 275,000 2,990,625
- --------------------------------------------------------------
SPAIN-5.80%
Banco Popular Espanol S.A.
(Banks-Major Regional) 20,000 1,303,353
- --------------------------------------------------------------
Endesa S.A.-ADR (Electric
Companies) 130,000 2,624,375
- --------------------------------------------------------------
Repsol S.A.-ADR (Oil-International
Integrated) 195,000 4,533,750
- --------------------------------------------------------------
8,461,478
- --------------------------------------------------------------
SWITZERLAND-4.80%
Nestle S.A.-ADR (Foods) 30,000 2,733,441
- --------------------------------------------------------------
Novartis A.G.-ADR (Health
Care/Drugs-Major Pharmaceuticals) 35,000 2,556,022
- --------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line) 3,000 1,710,733
- --------------------------------------------------------------
7,000,196
- --------------------------------------------------------------
UNITED KINGDOM-19.16%
Associated British Foods PLC-ADR
(Foods) 264,000 1,449,862
- --------------------------------------------------------------
</TABLE>
FS-14
<PAGE> 157
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
AstraZeneca Group PLC-ADR (Health
Care- Drugs-Major
Pharmaceuticals) 65,000 $ 2,713,750
- --------------------------------------------------------------
British Airways PLC-ADR (Airlines) 25,000 1,609,375
- --------------------------------------------------------------
British Telecommunications PLC
(Telephone) 14,000 3,332,000
- --------------------------------------------------------------
Carlton Communications PLC-ADR
(Electrical Equipment) 55,000 2,619,375
- --------------------------------------------------------------
Corus Group PLC-ADR (Iron & Steel) 55,000 1,423,125
- --------------------------------------------------------------
Glaxo Wellcome PLC-ADR (Health
Care-Drugs- Major
Pharmaceuticals) 40,000 2,235,000
- --------------------------------------------------------------
HSBC Holdings PLC-ADR (Banks-Money
Center) 75,000 5,258,227
- --------------------------------------------------------------
Marks & Spencer PLC (Retail-Stores) 300,000 1,427,798
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 55,000 1,739,375
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 250,000 1,893,236
- --------------------------------------------------------------
SmithKline Beecham PLC-ADR (Health
Care- Drugs-Major
Pharmaceuticals) 35,000 2,255,313
- --------------------------------------------------------------
27,956,436
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$96,020,162) 145,266,584
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-0.88%
FEDERAL HOME LOAN BANK-0.88%
Disc. Notes,(b)
1.50%, 01/03/00 (Cost $1,279,893) $1,280,000 $ 1,279,893
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.46% (Cost
$97,300,055) 146,546,477
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.46%) (670,743)
- --------------------------------------------------------------
NET ASSETS-100.00% $145,875,734
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
FS-15
<PAGE> 158
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$97,300,055) $146,546,477
- ---------------------------------------------------------
Foreign currencies, at value (cost $20,378) 20,600
- ---------------------------------------------------------
Receivables for:
Capital stock sold 146,305
- ---------------------------------------------------------
Interest and dividends 351,799
- ---------------------------------------------------------
Investment for deferred compensation plan 12,194
- ---------------------------------------------------------
Other assets 6,445
- ---------------------------------------------------------
Total assets 147,083,820
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 749,388
- ---------------------------------------------------------
Deferred compensation plan 12,194
- ---------------------------------------------------------
Accrued advisory fees 117,574
- ---------------------------------------------------------
Accrued distribution fees 253,604
- ---------------------------------------------------------
Accrued transfer agent fees 21,004
- ---------------------------------------------------------
Accrued administrative services fees 4,247
- ---------------------------------------------------------
Accrued operating expenses 50,075
- ---------------------------------------------------------
Total liabilities 1,208,086
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $145,875,734
=========================================================
NET ASSETS:
Class A $ 31,412,114
=========================================================
Class B $ 5,642,468
=========================================================
Class C $108,821,152
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,576,677
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 284,889
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 5,496,171
=========================================================
Class A:
Net asset value and redemption price per
share $ 19.92
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $19.92 divided
by 94.50%) $ 21.08
=========================================================
Class B:
Net asset value and offering price per
share $ 19.81
=========================================================
Class C:
Net asset value and offering price per
share $ 19.80
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $350,255 foreign
withholding tax) $ 2,789,892
- --------------------------------------------------------
Interest 110,773
- --------------------------------------------------------
Total investment income 2,900,665
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,307,027
- --------------------------------------------------------
Administrative services fees 25,721
- --------------------------------------------------------
Custodian fees 29,499
- --------------------------------------------------------
Operating services fees 290,546
- --------------------------------------------------------
Distribution fees-Class A 94,674
- --------------------------------------------------------
Distribution fees-Class B 42,551
- --------------------------------------------------------
Distribution fees-Class C 993,935
- --------------------------------------------------------
Directors' fees and expenses 3,847
- --------------------------------------------------------
Transfer Agent fees-Class A 17,199
- --------------------------------------------------------
Transfer Agent fees-Class B 7,228
- --------------------------------------------------------
Transfer Agent fees-Class C 65,930
- --------------------------------------------------------
Other 45,538
- --------------------------------------------------------
Total expenses 2,923,695
- --------------------------------------------------------
Less: Fees waived (166,253)
- --------------------------------------------------------
Expenses paid indirectly (759)
- --------------------------------------------------------
Net expenses 2,756,683
- --------------------------------------------------------
Net investment income 143,982
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 7,711,836
- --------------------------------------------------------
Foreign currencies (100,916)
- --------------------------------------------------------
7,610,920
- --------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 18,910,641
- --------------------------------------------------------
Foreign currencies 1,968
- --------------------------------------------------------
18,912,609
- --------------------------------------------------------
Net gain from investment securities and
foreign currencies 26,523,529
- --------------------------------------------------------
Net increase in net assets resulting from
operations $26,667,511
=========================================================
</TABLE>
FS-16
<PAGE> 159
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 143,982 $ 226,806
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 7,610,920 (5,494,200)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 18,912,609 15,275,348
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 26,667,511 10,007,954
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (432,681) (160,712)
- -----------------------------------------------------------------------------------------
Class B (42,668) --
- -----------------------------------------------------------------------------------------
Class C (838,386) --
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES:
Class A (115,532) (237)
- -----------------------------------------------------------------------------------------
Class B (20,873) (51)
- -----------------------------------------------------------------------------------------
Class C (410,586) (1,274)
- -----------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (2,103,894) 18,784,781
- -----------------------------------------------------------------------------------------
Class B 446,063 4,303,232
- -----------------------------------------------------------------------------------------
Class C (14,925,148) 3,112,106
- -----------------------------------------------------------------------------------------
Net increase in net assets 8,223,806 36,045,799
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 137,651,928 101,606,129
- -----------------------------------------------------------------------------------------
End of period $145,875,734 $137,651,928
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 96,576,058 $113,159,037
- -----------------------------------------------------------------------------------------
Undistributed net investment income (1,208,005) 58,330
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies 1,261,120 (5,899,391)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 49,246,561 30,333,952
- -----------------------------------------------------------------------------------------
$145,875,734 $137,651,928
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-17
<PAGE> 160
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor International Value Fund (the "Fund") is a series portfolio of AIM
Advisor Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of four
separate portfolios. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. Class A shares are
sold with a front-end sales charge. Class B shares and Class C shares are sold
with a contingent deferred sales charge. Matters affecting each portfolio or
class will be voted on exclusively by the shareholders of such portfolio or
class. The assets, liabilities and operations of each portfolio are accounted
for separately. Information presented in these financial statements pertains
only to the Fund. The Fund's investment objective is to achieve a high total
return on investment through growth of capital and current income, without
regard to federal income tax considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was decreased by $96,582 and undistributed net realized gains increased by
$96,582 as a result of differing book/tax treatment of foreign currency
transactions and foreign tax credits. Net assets of the Fund were
unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of capital stock
redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such
FS-18
<PAGE> 161
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Global Asset Management Limited ("IGAM") whereby AIM pays
IGAM an annual rate of 0.35% of the first $50 million of the Fund's average
daily net assets, plus 0.30% of the Fund's average daily net assets in excess of
$50 million to and including $100 million, plus 0.25% of the Fund's average
daily net assets in excess of $100 million.
The Company, pursuant to an operating services agreement with AIM, agreed to
pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. The
agreement provided that AIM pay 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. During the
year ended December 31, 1999, AIM was paid $151,347 under the agreement. As of
June 1, 1998, AIM voluntarily agreed to limit the operating services fees to an
annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $139,199.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $25,721 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and service agreement with A I M
Fund Services, Inc. ("AFS"). Pursuant to a transfer agency and service
agreement, the Fund agreed to pay AFS a fee for providing transfer agency and
shareholder services to the Fund. For the period July 1, 1999 through December
31, 1999, AFS was paid $34,877 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $67,620, $42,551 and $993,935, respectively, as
compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $27,054 for Class A shares.
AIM Distributors received commissions of $9,075 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $63,088 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,087 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
FS-19
<PAGE> 162
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $46 and $713, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $759 during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$30,504,918 and $43,581,993, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $52,043,747
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,905,912)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $48,137,835
=========================================================
</TABLE>
Cost of investments for tax purposes is $98,408,642.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 1,038,717 $ 17,709,368 1,753,054 $ 28,241,964
- -------------------------------------------------------------------------------------------------------------------
Class B 154,805 2,600,272 309,463 5,088,103
- -------------------------------------------------------------------------------------------------------------------
Class C 914,757 15,303,016 1,767,625 28,826,767
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 28,852 526,848 9,847 156,574
- -------------------------------------------------------------------------------------------------------------------
Class B 3,257 59,148 3 46
- -------------------------------------------------------------------------------------------------------------------
Class C 59,722 1,083,956 71 1,122
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,198,053) (20,340,110) (619,207) (9,613,757)
- -------------------------------------------------------------------------------------------------------------------
Class B (133,374) (2,213,357) (49,265) (784,917)
- -------------------------------------------------------------------------------------------------------------------
Class C (1,855,582) (31,312,120) (1,630,166) (25,715,783)
- -------------------------------------------------------------------------------------------------------------------
(986,899) $(16,582,979) 1,541,425 $ 26,200,119
===================================================================================================================
</TABLE>
FS-20
<PAGE> 163
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998 and for a share of Class C capital stock outstanding during
each of the years in the four-year period ended December 31, 1999 and the period
May 1, 1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
----------------------------------- ------------------------
1999 1998 1997(b) 1999 1998
-------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.57 $ 14.99 $13.42 $16.48 $16.21
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Income from investment operations:
Net investment income 0.13 0.09 0.17 (0.01) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Net gains on securities (both realized and unrealized) 3.57 1.59 1.69 3.56 0.27
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Total from investment operations 3.70 1.68 1.86 3.55 0.27
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income (0.28) (0.10) (0.07) (0.15) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Distributions from net realized gains (0.07) -- (0.22) (0.07) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Total distributions (0.35) (0.10) (0.29) (0.22) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Net asset value, end of period $ 19.92 $ 16.57 $14.99 $19.81 $16.48
============================================================ ======= ======= ====== ====== ======
Total return(c) 22.54% 11.20% 13.84% 21.70% 1.67%
============================================================ ======= ======= ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $31.412 $28,281 $8,444 $5,642 $4,289
============================================================ ======= ======= ====== ====== ======
Ratio of expenses to average net assets(d) 1.51%(e) 1.57% 1.71% 2.27%(e) 2.32%(f)
============================================================ ======= ======= ====== ====== ======
Ratio of net investment income (loss) to average net
assets(g) 0.71%(e) 0.84% 0.83% (0.05)%(e) 0.09%(f)
============================================================ ======= ======= ====== ====== ======
Portfolio turnover rate 24% 9% 9% 24% 9%
============================================================ ======= ======= ====== ====== ======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.72%, 1.81% and 1.81% for 1999-1997 for Class A and 2.38% and 2.46%
(annualized) for 1999-1998 for Class B.
(e) Ratios are based on average net assets of $27,054,104 and $4,255,071 for
Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 0.50%, 0.60% and 0.73% for 1999-1997 for Class A and
(0.16)% and (0.05)% (annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
------------------------------------------------------------
1999(b) 1998 1997(b) 1996 1995
-------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.48 $ 14.93 $ 13.42 $ 11.13 $10.00
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Income from investment operations:
Net investment income (loss) (0.01) -- 0.01 (0.01) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Net gains on securities (both realized and unrealized) 3.55 1.55 1.73 2.34 1.13
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Total from investment operations 3.54 1.55 1.74 2.33 1.13
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.15) -- (0.01) -- --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Distributions from net realized gains (0.07) -- (0.22) (0.04) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Total distributions (0.22) -- (0.23) (0.04) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Net asset value, end of period $ 19.80 $ 16.48 $ 14.93 $ 13.42 $11.13
============================================================ ======== ======== ======= ======= ======
Total return(c) 21.64% 10.38% 12.98% 20.99% 11.28%
============================================================ ======== ======== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $108,821 $105,083 $93,162 $51,916 $9,467
============================================================ ======== ======== ======= ======= ======
Ratio of expenses to average net assets(d) 2.27%(e) 2.32% 2.46% 2.50% 2.50%(f)
============================================================ ======== ======== ======= ======= ======
Ratio of net investment income (loss) to average net
assets(g) (0.05)%(e) 0.09% 0.08% (0.16)% 0.03%(f)
============================================================ ======== ======== ======= ======= ======
Portfolio turnover rate 24% 9% 9% 5% 2%
============================================================ ======== ======== ======= ======= ======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.38% and 2.46% for 1999-1998.
(e) Ratios are based on average net assets of $99,393,505.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.16)% and (0.05)% for 1999-1998.
FS-21
<PAGE> 164
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Advisor Large Cap Value Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor Large Cap Fund (a portfolio of
AIM Advisor Funds, Inc.), including the schedule of
investments, as of December 31, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets and the financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Advisor
Large Cap Value Fund as of December 31, 1999, the results
of its operations for the year then ended, the changes in
its net assets and the financial highlights for each of
the years in the two-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-22
<PAGE> 165
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-97.68%
AUTOMOBILES-1.36%
Ford Motor Co. 41,000 $ 2,190,937
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.39%
FleetBoston Financial Corp. 60,000 2,088,750
- --------------------------------------------------------------
National City Corp. 33,500 793,531
- --------------------------------------------------------------
State Street Corp. 13,200 964,425
- --------------------------------------------------------------
3,846,706
- --------------------------------------------------------------
BANKS (MONEY CENTER)-4.30%
Bank of America Corp. 45,674 2,292,264
- --------------------------------------------------------------
Chase Manhattan Corp. (The) 34,500 2,680,219
- --------------------------------------------------------------
First Union Corp. 60,000 1,968,750
- --------------------------------------------------------------
6,941,233
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-1.46%
Anheuser-Busch Cos, Inc. 33,200 2,353,050
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.24%
MediaOne Group, Inc. 26,000 1,997,125
- --------------------------------------------------------------
CHEMICALS-1.82%
Dow Chemical Co. (The) 13,200 1,763,850
- --------------------------------------------------------------
Praxair, Inc. 23,300 1,172,281
- --------------------------------------------------------------
2,936,131
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.99%
ADC Telecommunications, Inc.(a) 22,000 1,596,375
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-5.64%
Compaq Computer Corp. 36,200 979,662
- --------------------------------------------------------------
Hewlett-Packard Co. 26,200 2,985,162
- --------------------------------------------------------------
International Business Machines
Corp. 25,700 2,775,600
- --------------------------------------------------------------
Sun Microsystems, Inc.(a) 30,500 2,361,844
- --------------------------------------------------------------
9,102,268
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-7.76%
Cadence Design Systems, Inc.(a) 65,200 1,564,800
- --------------------------------------------------------------
Computer Associates International,
Inc. 56,000 3,916,500
- --------------------------------------------------------------
Compuware Corp.(a) 54,100 2,015,225
- --------------------------------------------------------------
Microsoft Corp.(a) 17,400 2,031,450
- --------------------------------------------------------------
Oracle Corp.(a) 26,650 2,986,466
- --------------------------------------------------------------
12,514,441
- --------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES)-1.07%
Vulcan Materials Co. 43,300 1,729,294
- --------------------------------------------------------------
CONSUMER FINANCE-0.98%
Household International, Inc. 42,300 1,575,675
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.51%
SUPERVALU, INC 41,200 824,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRIC COMPANIES-2.71%
DTE Energy Co. 35,000 $ 1,098,125
- --------------------------------------------------------------
GPU, Inc. 35,000 1,047,812
- --------------------------------------------------------------
Southern Co. (The) 33,200 780,200
- --------------------------------------------------------------
Teco Energy, Inc. 78,000 1,447,875
- --------------------------------------------------------------
4,374,012
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-3.75%
Emerson Electric Co. 21,200 1,216,350
- --------------------------------------------------------------
General Electric Co. 31,200 4,828,200
- --------------------------------------------------------------
6,044,550
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-2.02%
Intel Corp. 39,600 3,259,575
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-6.76%
American General Corp. 48,600 3,687,525
- --------------------------------------------------------------
Citigroup Inc. 54,000 3,000,375
- --------------------------------------------------------------
Fannie Mae 25,000 1,560,937
- --------------------------------------------------------------
MGIC Investment Corp. 44,000 2,648,250
- --------------------------------------------------------------
10,897,087
- --------------------------------------------------------------
FOODS-0.37%
H.J. Heinz Co. 15,000 597,187
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.93%
Abbott Laboratories 24,500 889,656
- --------------------------------------------------------------
American Home Products Corp. 35,900 1,415,806
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 25,700 1,649,619
- --------------------------------------------------------------
Johnson & Johnson 25,500 2,374,687
- --------------------------------------------------------------
6,329,768
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-3.53%
Merck & Co., Inc. 40,000 2,682,500
- --------------------------------------------------------------
Schering-Plough Corp. 71,400 3,012,187
- --------------------------------------------------------------
5,694,687
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.58%
Biomet, Inc. 23,500 940,000
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.51%
Quintiles Transnational Corp.(a) 44,400 829,725
- --------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.65%
Whirlpool Corp. 16,100 1,047,506
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-3.02%
Kimberly-Clark Corp. 37,900 2,472,975
- --------------------------------------------------------------
Procter & Gamble, Co. (The) 21,900 2,399,419
- --------------------------------------------------------------
4,872,394
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.44%
Jefferson-Pilot Corp. 22,700 1,549,275
- --------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 166
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE/HEALTH)-(CONTINUED)
Torchmark Corp. 26,700 $ 775,969
- --------------------------------------------------------------
2,325,244
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.67%
American International Group, Inc. 10,000 1,081,250
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.78%
Morgan Stanley Dean Witter & Co. 20,150 2,876,413
- --------------------------------------------------------------
IRON & STEEL-0.67%
Nucor Corp. 19,600 1,074,325
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.46%
Mattel, Inc. 56,700 744,188
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-5.29%
Illinois Tool Works, Inc. 32,677 2,207,740
- --------------------------------------------------------------
Minnesota Mining and Manufacturing
Co. 16,500 1,614,938
- --------------------------------------------------------------
Textron, Inc. 22,400 1,717,800
- --------------------------------------------------------------
Tyco International Ltd. 32,600 1,267,325
- --------------------------------------------------------------
United Technologies Corp. 26,500 1,722,500
- --------------------------------------------------------------
8,530,303
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.53%
York International Corp. 30,900 847,819
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-5.64%
Chevron Corp. 18,100 1,567,913
- --------------------------------------------------------------
Exxon Mobil Corp. 51,000 4,108,688
- --------------------------------------------------------------
Repsol S.A.-ADR (Spain) 41,900 974,175
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares-ADR (Netherlands) 40,400 2,441,675
- --------------------------------------------------------------
9,092,451
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-1.07%
International Paper Co. 30,700 1,732,631
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.73%
Xerox Corp. 52,000 1,179,750
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-1.86%
Gannett Co., Inc. 36,700 2,993,344
- --------------------------------------------------------------
RESTAURANTS-1.00%
McDonald's Corp. 40,100 1,616,531
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-3.29%
Lowe's Cos., Inc. 66,000 3,943,500
- --------------------------------------------------------------
Sherwin-Williams Co. 64,700 1,358,700
- --------------------------------------------------------------
5,302,200
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-0.56%
Dillards, Inc.-Class A 44,400 $ 896,325
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.81%
Albertson's, Inc. 40,400 1,302,900
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.74%
Costco Wholesale Corp.(a) 13,000 1,186,250
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.64%
Office Depot, Inc.(a) 93,700 1,024,844
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.66%
First Data Corp. 54,300 2,677,669
- --------------------------------------------------------------
SPECIALTY PRINTING-0.90%
Deluxe Corp. 53,100 1,456,931
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-3.26%
AT&T Corp. 29,100 1,476,825
- --------------------------------------------------------------
MCI WorldCom, Inc.(a) 71,250 3,780,703
- --------------------------------------------------------------
5,257,528
- --------------------------------------------------------------
TELEPHONE-6.20%
ALLTEL Corp. 10,800 893,025
- --------------------------------------------------------------
Bell Atlantic Corp. 70,100 4,315,531
- --------------------------------------------------------------
SBC Communications, Inc. 54,087 2,636,741
- --------------------------------------------------------------
US West, Inc. 30,000 2,160,000
- --------------------------------------------------------------
10,005,297
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.43%
Liz Claiborne, Inc. 18,300 688,538
- --------------------------------------------------------------
TOBACCO-0.70%
Philip Morris Cos. Inc. 48,500 1,124,594
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$113,888,199) 157,511,051
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-2.72%
FEDERAL HOME LOAN BANK-2.72%
Disc. Notes,(b)
1.50%, 01/03/00 (Cost $4,385,635) $4,386,000 4,385,635
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.40% (Cost
$118,273,834) 161,896,686
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.40%) (640,236)
- --------------------------------------------------------------
NET ASSETS-100.00% $161,256,450
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Disc. - Discounted
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
FS-24
<PAGE> 167
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$118,273,834) $161,896,686
- ---------------------------------------------------------
Receivables for:
Capital stock sold 128,484
- ---------------------------------------------------------
Interest and dividends 215,784
- ---------------------------------------------------------
Investment for deferred compensation plan 12,597
- ---------------------------------------------------------
Other assets 14,320
- ---------------------------------------------------------
Total assets 162,267,871
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 452,661
- ---------------------------------------------------------
Deferred compensation plan 12,597
- ---------------------------------------------------------
Accrued advisory fees 102,022
- ---------------------------------------------------------
Administrative services fees 4,247
- ---------------------------------------------------------
Accrued distribution fees 372,598
- ---------------------------------------------------------
Accrued transfer agent fees 9,918
- ---------------------------------------------------------
Accrued operating expenses 57,378
- ---------------------------------------------------------
Total liabilities 1,011,421
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $161,256,450
=========================================================
NET ASSETS:
Class A $ 12,011,184
=========================================================
Class B $ 6,572,901
=========================================================
Class C $142,672,365
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 549,760
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 302,862
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 6,575,037
=========================================================
Class A:
Net asset value and redemption price per
share $ 21.85
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $21.85 divided by
94.50%) $ 23.12
=========================================================
Class B:
Net asset value and offering price per
share $ 21.70
=========================================================
Class C:
Net asset value and offering price per
share $ 21.70
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $53,387 foreign
withholding tax) $ 3,415,803
- ---------------------------------------------------------
Interest 202,066
- ---------------------------------------------------------
Total investment income 3,617,869
- ---------------------------------------------------------
EXPENSES:
Advisory fees 1,382,625
- ---------------------------------------------------------
Administrative services fees 25,205
- ---------------------------------------------------------
Custodian fees 24,305
- ---------------------------------------------------------
Operating services fees 434,220
- ---------------------------------------------------------
Directors' fees and expenses 4,977
- ---------------------------------------------------------
Distribution fees-Class A 45,980
- ---------------------------------------------------------
Distribution fees-Class B 56,134
- ---------------------------------------------------------
Distribution fees-Class C 1,655,995
- ---------------------------------------------------------
Transfer Agent Fees-Class A 12,763
- ---------------------------------------------------------
Transfer Agent Fees-Class B 1,909
- ---------------------------------------------------------
Transfer Agent Fees-Class C 56,313
- ---------------------------------------------------------
Other 46,418
- ---------------------------------------------------------
Total expenses 3,746,844
- ---------------------------------------------------------
Less: Fees waived (264,083)
- ---------------------------------------------------------
Expenses paid indirectly (1,655)
- ---------------------------------------------------------
Net expenses 3,481,106
- ---------------------------------------------------------
Net investment income 136,763
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain from investment
securities 31,241,883
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (33,428,078)
- ---------------------------------------------------------
Net gain (loss) on investment
securities (2,186,195)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (2,049,432)
=========================================================
</TABLE>
FS-25
<PAGE> 168
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 136,763 $ 383,276
- ------------------------------------------------------------------------------------------
Net realized gain from investment securities 31,241,883 13,666,132
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (33,428,078) 9,514,639
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,049,432) 23,564,047
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (103,102) (63,186)
- ------------------------------------------------------------------------------------------
Class B (9,281) (4,659)
- ------------------------------------------------------------------------------------------
Class C (252,383) (130,140)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (1,495,160) (1,168,568)
- ------------------------------------------------------------------------------------------
Class B (840,484) (558,881)
- ------------------------------------------------------------------------------------------
Class C (17,808,848) (14,182,679)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A (2,025,526) 10,506,884
- ------------------------------------------------------------------------------------------
Class B 152,238 7,500,215
- ------------------------------------------------------------------------------------------
Class C (19,999,780) 2,997,348
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (44,431,758) 28,460,381
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 205,688,208 177,227,827
- ------------------------------------------------------------------------------------------
End of period $161,256,450 $ 205,688,208
==========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $107,291,948 $ 127,632,168
- ------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (19,552) 210,789
- ------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 10,361,202 794,321
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 43,622,852 77,050,930
- ------------------------------------------------------------------------------------------
$161,256,450 $ 205,688,208
==========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Large Cap Value Fund (the "Fund") is a series portfolio of AIM
Advisor Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of four
separate portfolios. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. Class A shares are
sold with a front-end sales charge. Class B shares and Class C shares are sold
with a contingent deferred sales charge. Matters affecting each portfolio or
class will be voted on exclusively by the shareholders of such portfolio or
class. The assets, liabilities and operations of each portfolio are accounted
for separately. Information presented in these financial statements pertains
only to the Fund. The Fund's investment objective is to achieve a high total
return on investment through growth of capital and current income, without
regard to federal income tax considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded,
FS-26
<PAGE> 169
or lacking any sales on a particular day, the security is valued at the
closing bid price on that day. Each security reported on the NASDAQ National
Market System is valued at the last sales price on the valuation date or
absent a last sales price, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. For purposes of determining net asset value per share, futures
and option contracts generally will be valued 15 minutes after the close of
trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was decreased by
$2,338, undistributed net realized gains decreased by $1,530,510 and paid-in
capital increased by $1,532,848 as a result of differing book/tax treatment
of equalization credits. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of capital stock redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Capital Management, Inc. ("ICM") whereby AIM pays ICM an
annual rate of 0.20% of the Fund's average daily net assets.
The Company, pursuant to an operating services agreement with AIM, agreed to
pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. The
agreement provided that AIM pay 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. During the
year ended December 31, 1999, AIM was paid $183,274 under the agreement. As of
June 1, 1998, AIM voluntarily agreed to limit the operating services fees to an
annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $250,946.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $25,205 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and
FS-27
<PAGE> 170
service agreement with A I M Fund Services, Inc. ("AFS"). Pursuant to a transfer
agency and service agreement, the Fund agreed to pay AFS a fee for providing
transfer agency and shareholder services to the Fund. For the period July 1,
1999 through December 31, 1999, AFS was paid $49,423 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $32,843, $56,134 and $1,655,995, respectively, as
compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $13,137 for Class A shares.
AIM Distributors received commissions of $20,196 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $29,018 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,113 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $706 and $949, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,655 during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$78,092,874 and $118,841,686, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $50,107,417
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (6,484,595)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $43,622,822
=========================================================
</TABLE>
Cost of investments for tax purposes is $118,273,864.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 159,413 $ 4,077,027 546,830 $ 13,836,246
- ------------------------------------------------------------------------------
Class B 227,858 5,636,287 312,678 8,015,582
- ------------------------------------------------------------------------------
Class C 440,345 10,891,628 745,155 18,894,552
- ------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 72,911 1,550,569 48,828 1,187,383
- ------------------------------------------------------------------------------
Class B 37,976 796,679 20,082 485,925
- ------------------------------------------------------------------------------
Class C 787,496 16,527,190 553,152 13,379,377
- ------------------------------------------------------------------------------
Reacquired:
Class A (305,004) (7,653,122) (180,617) (4,516,745)
- ------------------------------------------------------------------------------
Class B (255,300) (6,280,728) (40,432) (1,001,292)
- ------------------------------------------------------------------------------
Class C (1,944,581) (47,418,598) (1,159,833) (29,276,581)
- ------------------------------------------------------------------------------
(778,886) $(21,873,068) 845,843 $ 21,004,447
==============================================================================
</TABLE>
FS-28
<PAGE> 171
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998, and for a share of Class C capital stock outstanding during
each of the years in the five-year period ended December 31, 1999.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
----------------------------- ------------------
1999 1998(b) 1997(b) 1999 1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.20 $ 24.11 $ 20.57 $ 25.06 $ 25.59
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.19 0.20 0.23 0.01 0.02
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.30) 3.11 6.17 (0.31) 1.57
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total from investment operations (0.11) 3.31 6.40 (0.30) 1.59
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.22) (0.12) (0.15) (0.04) (0.02)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Distributions from net realized gains (3.02) (2.10) (2.71) (3.02) (2.10)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total distributions (3.24) (2.22) (2.86) (3.06) (2.12)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 21.85 $ 25.20 $ 24.11 $ 21.70 $ 25.06
============================================================ ======= ======= ======= ======= =======
Total return(c) (0.01)% 14.07% 31.66% (0.75)% 6.51%
============================================================ ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,011 $15,684 $ 5,000 $ 6,573 $ 7,325
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets(d) 1.26%(e) 1.30% 1.46% 1.95%(e) 2.05%(f)
============================================================ ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(g) 0.70%(e) 0.91% 0.77% 0.01%(e) 0.16%(f)
============================================================ ======= ======= ======= ======= =======
Portfolio turnover rate 44% 52% 34% 44% 52%
============================================================ ======= ======= ======= ======= =======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) After fee waivers and/or reimbursements. Ratios of expenses to average net
assets prior to fee waivers and/or reimbursement were 1.50%, 1.55% and 1.56%
for 1999-1997 for Class A and 2.09% and 2.20% (annualized) for 1999-1998 for
Class B.
(e) Ratios are based on average net assets of $13,137,049 and $5,613,443 for
Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or reimbursements. Ratios of net investment income
(loss) to average net assets prior to fee waivers and/or reimbursement were
0.46%, 0.66% and 0.67% for 1999-1997 for Class A, and (0.13)% and 0.01%
(annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
-----------------------------------------------------------
1999 1998 1997(b) 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.05 $ 24.08 $ 20.57 $ 17.60 $ 13.96
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.01 0.04 0.01 0.05 0.10
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.30) 3.05 6.21 2.97 4.11
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operation (0.29) 3.09 6.22 3.02 4.21
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.04) (0.02) -- (0.05) (0.10)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (3.02) (2.10) (2.71) -- (0.47)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (3.06) (2.12) (2.71) (0.05) (0.57)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 21.70 $ 25.05 $ 24.08 $ 20.57 $ 17.60
============================================================ ======== ======== ======== ======== ========
Total return(c) (0.71)% 13.15% 30.66% 17.17% 30.28%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $142,672 $182,679 $172,228 $137,416 $113,573
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(d) 1.95%(e) 2.05% 2.21% 2.26% 2.28%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(f) 0.01%(e) 0.16% 0.02% 0.24% 0.64%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 44% 52% 34% 19% 17%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or reimbursements. Ratios of expenses to average net
assets prior to fee waivers and/or reimbursement were 2.09% and 2.20% for
1999-1998.
(e) Ratios are based on average net assets of $165,599,460.
(f) After fee waivers and/or reimbursements. Ratios of net investment income
(loss) to average net assets prior to fee waivers and/or reimbursement were
(0.13)% and 0.01% for 1999-1998.
FS-29
<PAGE> 172
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Advisor Real Estate Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor Real Estate Fund (a portfolio
of AIM Advisor Funds, Inc.), including the schedule of
investments, as of December 31, 1999, and the related
statement of operations for the year then ended, and the
statement of changes in net assets and financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Advisor
Real Estate Fund as of December 31, 1999, the results of
its operations for the year then ended, the changes in
its net assets and the financial highlights for each of
the years in the two-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-30
<PAGE> 173
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS &
COMMON STOCKS-90.09%
APARTMENTS-23.23%
Apartment Investment & Management
Co. 44,400 $ 1,767,675
- --------------------------------------------------------------
Avalonbay Communities, Inc. 60,000 2,058,750
- --------------------------------------------------------------
Charles E. Smith Residential Realty,
Inc. 61,700 2,182,328
- --------------------------------------------------------------
Equity Residential Properties Trust 50,000 2,134,375
- --------------------------------------------------------------
Essex Property Trust, Inc. 33,800 1,149,200
- --------------------------------------------------------------
Home Properties of New York, Inc. 30,000 823,125
- --------------------------------------------------------------
Post Properties, Inc. 15,600 596,700
- --------------------------------------------------------------
10,712,153
- --------------------------------------------------------------
DIVERSIFIED-3.19%
Beacon Capital 55,000 660,000
- --------------------------------------------------------------
Vornado Realty Trust 25,000 812,500
- --------------------------------------------------------------
1,472,500
- --------------------------------------------------------------
INDUSTRIAL PROPERTIES-5.40%
First Industrial Realty Trust, Inc. 50,000 1,371,875
- --------------------------------------------------------------
ProLogis Trust 58,000 1,116,500
- --------------------------------------------------------------
2,488,375
- --------------------------------------------------------------
INDUSTRIAL/OFFICE PROPERTIES-10.31%
Duke-Weeks Realty Corp. 90,000 1,755,000
- --------------------------------------------------------------
Liberty Property Trust 72,950 1,769,037
- --------------------------------------------------------------
Reckson Associates Realty Corp. 60,000 1,230,000
- --------------------------------------------------------------
4,754,037
- --------------------------------------------------------------
LODGING-HOTELS-3.61%
Hospitality Properties Trust 83,000 1,582,187
- --------------------------------------------------------------
MeriStar Hotels & Resorts, Inc.(a) 22,700 80,869
- --------------------------------------------------------------
1,663,056
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.57%
Sun Communities, Inc. 22,500 724,219
- --------------------------------------------------------------
OFFICE PROPERTIES-23.81%
Arden Realty Group, Inc. 79,800 1,600,987
- --------------------------------------------------------------
Boston Properties, Inc. 45,500 1,416,187
- --------------------------------------------------------------
Equity Office Properties Trust 89,000 2,191,625
- --------------------------------------------------------------
Highwoods Properties, Inc. 52,950 1,231,088
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PROPERTIES-(CONTINUED)
Kilroy Realty Corp. 45,700 $ 1,005,400
- --------------------------------------------------------------
Prentiss Properties Trust 71,700 1,505,700
- --------------------------------------------------------------
SL Green Realty Corp. 51,100 1,111,425
- --------------------------------------------------------------
Spieker Properties, Inc. 25,100 914,581
- --------------------------------------------------------------
10,976,993
- --------------------------------------------------------------
REGIONAL MALLS-7.93%
General Growth Properties 56,500 1,582,000
- --------------------------------------------------------------
Macerich Co. (The) 39,000 811,688
- --------------------------------------------------------------
Simon Property Group, Inc. 55,100 1,263,856
- --------------------------------------------------------------
3,657,544
- --------------------------------------------------------------
SELF-STORAGE-4.32%
Public Storage, Inc. 87,900 1,994,231
- --------------------------------------------------------------
SHOPPING CENTERS-6.72%
Federal Realty Investment Trust 23,000 432,688
- --------------------------------------------------------------
JDN Realty Corp. 54,500 878,813
- --------------------------------------------------------------
Kimco Realty Corp. 38,900 1,317,738
- --------------------------------------------------------------
Pan Pacific Retail Properties, Inc. 28,700 468,169
- --------------------------------------------------------------
3,097,408
- --------------------------------------------------------------
Total Real Estate Investment
Trusts & Common Stocks (Cost
$43,837,662) 41,540,516
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-8.73%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-8.73%
Disc. Notes,(b)
5.20%, 01/03/00 (Cost $4,024,665) $4,025,000 4,024,665
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.82% (Cost
$47,862,327) 45,565,181
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.18% 544,859
- --------------------------------------------------------------
NET ASSETS-100.00% $46,110,040
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
FS-31
<PAGE> 174
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$47,862,327) $ 45,565,181
- ---------------------------------------------------------
Cash 1,474
- ---------------------------------------------------------
Receivables for:
Capital stock sold 621,622
- ---------------------------------------------------------
Interest and dividends 394,484
- ---------------------------------------------------------
Investment for deferred compensation plan 11,796
- ---------------------------------------------------------
Other assets 1,198
- ---------------------------------------------------------
Total assets 46,595,755
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 357,366
- ---------------------------------------------------------
Deferred compensation plan 11,796
- ---------------------------------------------------------
Accrued advisory fees 32,576
- ---------------------------------------------------------
Accrued administrative services fees 4,247
- ---------------------------------------------------------
Accrued distribution fees 69,412
- ---------------------------------------------------------
Accrued transfer agent fees 1,171
- ---------------------------------------------------------
Accrued operating expenses 9,147
- ---------------------------------------------------------
Total liabilities 485,715
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 46,110,040
- ---------------------------------------------------------
NET ASSETS:
Class A $ 16,278,924
=========================================================
Class B $ 9,839,261
=========================================================
Class C $ 19,991,855
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,534,334
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 924,769
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,882,276
=========================================================
Class A:
Net asset value and redemption price per
share $ 10.61
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $10.61 divided by
95.25%) $ 11.14
=========================================================
Class B:
Net asset value and offering price per
share $ 10.64
=========================================================
Class C:
Net asset value and offering price per
share $ 10.62
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $7,786 foreign withholding
tax) $ 2,693,620
- ---------------------------------------------------------
Interest 101,227
- ---------------------------------------------------------
Total investment income 2,794,847
- ---------------------------------------------------------
EXPENSES:
Advisory fees 473,702
- ---------------------------------------------------------
Administrative services fees 25,205
- ---------------------------------------------------------
Operating Services Fees 124,989
- ---------------------------------------------------------
Custodian fees 7,249
- ---------------------------------------------------------
Distribution fees-Class A 66,167
- ---------------------------------------------------------
Distribution fees-Class B 73,791
- ---------------------------------------------------------
Distribution fees-Class C 263,496
- ---------------------------------------------------------
Directors' fees and expenses 10,020
- ---------------------------------------------------------
Transfer Agent fees-Class A 21,664
- ---------------------------------------------------------
Transfer Agent fees-Class B 8,293
- ---------------------------------------------------------
Transfer Agent fees-Class C 29,612
- ---------------------------------------------------------
Other 21,903
- ---------------------------------------------------------
Total expenses 1,126,091
- ---------------------------------------------------------
Less:
Expenses paid indirectly (268)
- ---------------------------------------------------------
Fees waived by advisor (29,338)
- ---------------------------------------------------------
Net expenses 1,096,485
- ---------------------------------------------------------
Net investment income 1,698,362
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (8,493,728)
- ---------------------------------------------------------
Foreign currencies 461
- ---------------------------------------------------------
(8,493,267)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 4,697,040
- ---------------------------------------------------------
Foreign currencies (56)
- ---------------------------------------------------------
4,696,984
- ---------------------------------------------------------
Net gain (loss) from investment securities
and foreign currencies (3,796,283)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(2,097,921)
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-32
<PAGE> 175
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,698,362 $ 2,687,688
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (8,493,267) (7,868,208)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 4,696,984 (13,364,502)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,097,921) (18,545,022)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (880,747) (879,078)
- -----------------------------------------------------------------------------------------
Class B (292,274) (195,557)
- -----------------------------------------------------------------------------------------
Class C (1,010,658) (1,184,516)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (434,776)
- -----------------------------------------------------------------------------------------
Class B -- (143,531)
- -----------------------------------------------------------------------------------------
Class C -- (703,226)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A (2,285,404) 11,098,948
- -----------------------------------------------------------------------------------------
Class B 3,517,105 8,539,414
- -----------------------------------------------------------------------------------------
Class C (10,749,346) 1,916,228
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (13,799,245) (531,116)
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 59,909,285 60,440,401
- -----------------------------------------------------------------------------------------
End of period $ 46,110,040 $ 59,909,285
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 64,744,590 $ 74,263,053
- -----------------------------------------------------------------------------------------
Undistributed net investment income (1,935) 490,850
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (16,335,470) (7,850,489)
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (2,297,145) (6,994,129)
- -----------------------------------------------------------------------------------------
$ 46,110,040 $ 59,909,285
=========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-33
<PAGE> 176
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor Real Estate Fund (the "Fund") is a series portfolio of AIM Advisor
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of four separate
portfolios. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is to achieve a high total return on
investment through growth of capital and current income, without regard to
federal income tax considerations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was decreased by $7,468, undistributed net realized gains increased by
$8,286 and paid-in capital decreased by $818 as a result of differing
book/tax treatment of foreign currency transactions and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend
date, and are declared and paid quarterly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $14,698,073 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
FS-34
<PAGE> 177
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Realty Advisors, Inc. ("IRAI") whereby AIM pays IRAI an
annual rate of 0.35% of the first $100 million of the Fund's average daily net
assets, plus 0.25% of the Fund's average daily net assets in excess of $100
million.
The Company, pursuant to an operating services agreement with AIM, agreed to
pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. The
agreement provided that AIM pay 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. During the
year ended December 31, 1999, AIM was paid $114,556 under the agreement. As of
June 1, 1998, AIM voluntarily agreed to limit the operating services fees to an
annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $10,433.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $25,205 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and service agreement with A I M
Fund Services, Inc. ("AFS"). Pursuant to a transfer agency and service
agreement, the Fund agreed to pay AFS a fee for providing transfer agency and
shareholder services to the Fund. For the period July 1, 1999 through December
31, 1999, AFS was paid $44,655 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $47,262, $73,791 and $263,496, respectively, as
compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $18,905 for Class A shares.
AIM Distributors received commissions of $13,906 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $9,617 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,198 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $268, under an expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $268
during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
FS-35
<PAGE> 178
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$26,296,390 and $39,815,191, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 813,712
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,302,531)
- -------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(2,488,819)
=========================================================================
</TABLE>
Cost of investments for tax purposes is $48,054,000.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 805,892 $ 9,057,241 1,866,966 $ 26,220,226
- -------------------------------------------------------------------------------------------------------------------
Class B 554,129 6,045,844 965,596 13,668,547
- -------------------------------------------------------------------------------------------------------------------
Class C 301,049 3,371,676 867,066 12,416,738
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 73,515 798,302 103,931 1,234,506
- -------------------------------------------------------------------------------------------------------------------
Class B 24,076 261,703 26,797 312,988
- -------------------------------------------------------------------------------------------------------------------
Class C 81,508 887,308 146,264 1,732,251
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,098,601) (12,140,947) (1,266,277) (16,355,784)
- -------------------------------------------------------------------------------------------------------------------
Class B (254,623) (2,790,442) (391,207) (5,442,121)
- -------------------------------------------------------------------------------------------------------------------
Class C (1,372,447) (15,008,330) (933,062) (12,232,761)
- -------------------------------------------------------------------------------------------------------------------
(885,502) $ (9,517,645) 1,386,074 $ 21,554,590
===================================================================================================================
</TABLE>
FS-36
<PAGE> 179
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998, and a share of Class C capital stock outstanding during each
of the years in the four-year period ended December 31, 1999 and the period May
1, 1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
-------------------------------- --------------------
1999 1998(b) 1997(b) 1999 1998(b)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $ 14.19 $ 11.48 $ 15.34
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.42 0.58 0.34 0.32 0.37
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.75) (4.11) 2.39 (0.72) (3.58)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total from investment operations (0.33) (3.53) 2.73 (0.40) (3.21)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.52) (0.50) (0.44) (0.44) (0.40)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Distributions from net realized gains -- (0.25) (0.74) -- (0.25)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total distributions (0.52) (0.75) (1.18) (0.44) (0.65)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net asset value, end of period $ 10.61 $ 11.46 $ 15.74 $ 10.64 $ 11.48
============================================================ ======== ======== ======== ======== =======
Total return(c) (2.88)% (22.54)% 19.78% (3.53)% (21.02)%
============================================================ ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 16,279 $ 20,087 $ 16,507 $ 9,839 $ 6,901
============================================================ ======== ======== ======== ======== =======
Ratio of expenses to average net assets(d) 1.61%(e) 1.55% 1.60% 2.35%(e) 2.31%(f)
============================================================ ======== ======== ======== ======== =======
Ratio of net investment income to average net assets(g) 3.70%(e) 4.37% 3.26% 2.96%(e) 3.62%(f)
============================================================ ======== ======== ======== ======== =======
Portfolio turnover rate 52% 69% 57% 52% 69%
============================================================ ======== ======== ======== ======== =======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.73% , 1.71% and 1.70% for 1999-1997 for Class A and 2.37% and 2.35%
(annualized) for 1999-1998 for Class B.
(e) Ratios are based on average net assets of $18,904,818 and $7,379,172 for
Class A and Class B, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.58%, 4.21% and 3.16% for 1999-1997 for Class A and
2.94% and 3.56% (annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
------------------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 15.74 $ 14.19 $ 10.76 $ 10.00
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.33 0.50 0.36 0.33 0.16
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.73) (4.13) 2.26 3.51 0.75
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.40) (3.63) 2.62 3.84 0.91
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.44) (0.40) (0.33) (0.31) (0.15)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains -- (0.25) (0.74) (0.10) --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.44) (0.65) (1.07) (0.41) (0.15)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 10.62 $ 11.46 $ 15.74 $ 14.19 $ 10.76
============================================================ ======== ======== ======== ======== ========
Total return(c) (3.54)% (23.16)% 18.88% 36.43% 9.12%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 19,992 $ 32,921 $ 43,934 $ 20,566 $ 5,565
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(d) 2.35%(e) 2.31% 2.35% 2.40% 2.40%(f)
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(g) 2.96%(e) 3.62% 2.54% 3.21% 4.68%(f)
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 52% 69% 57% 25% 7%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.37% and 2.37% for 1999-1998.
(e) Ratios are based on average net assets of $26,349,554.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 2.94% and 3.56% for 1999-1998.
FS-37
<PAGE> 180
PART C
OTHER INFORMATION
Item 23. Exhibits
a (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 were filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997,
and are incorporated by reference herein.
(b) Articles of Amendment to the Articles of
Incorporation, as filed with the State Department of
Assessments and Taxation of the state of Maryland on
January 16, 1996, filed on EDGAR with Post-Effective
Amendment No. 26 on April 22, 1996, and are
incorporated by reference herein.
(c) Articles Supplementary, dated February 14, 1996,
to the Articles of Incorporation were filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and are incorporated by reference herein.
(d) Articles Supplementary to the Articles of
Incorporation dated August 13, 1996, were filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and are incorporated by reference herein.
(e) Articles Supplementary, dated September 29, 1997,
to the Articles of Incorporation were filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997,
and are incorporated by reference herein.
(f) Articles of Amendment, dated June 18, 1999, to
the Amended and Restated Articles of Incorporation,
dated March 7, 1995, is filed herewith
electronically.
(g) Articles Supplementary, dated August 9, 1999, to
the Amended and Restated Articles of Incorporation,
dated March 7, 1995, is filed herewith
electronically.
(h) Articles Supplementary, dated December 23, 1999,
to the Amended and Restated Articles of
Incorporation, dated March 7, 1995, is filed herewith
electronically.
b (1) By-Laws of Registrant, as amended, previously filed
with Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on May 1, 1995,
was filed on EDGAR with Post-Effective Amendment No.
31 on April 30, 1997.
(2) (a) Amended and Restated Bylaws of Registrant, dated
September 20, 1997, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
33 on December 30, 1997, and is incorporated by
reference herein.
(b) First Amendment, dated June 9, 1999, to Amended
and Restated Bylaws of Registrant, dated September
20, 1997, is filed herewith electronically.
c Instruments Defining Rights of Security Holders -
None.
d (1) 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.
C-1
<PAGE> 181
(2) (a) Investment Advisory Agreement between Registrant
and A I M Advisors, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997,
and is incorporated by reference herein.
(b) Amendment No. 1, dated March 2, 1998, to the
Investment Advisory Agreement, dated August 4, 1997,
is filed herewith electronically.
(c) Amendment No. 2, dated June 21, 1999, to the
Investment Advisory Agreement, dated August 4, 1997,
is filed herewith electronically.
(3) 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.
(4) Sub-Advisory Agreement between A I M Advisors, Inc.
and INVESCO, Inc. (formerly, INVESCO Capital
Management, Inc.) dated August 4, 1997, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997,
and is incorporated by reference herein.
(5) 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.
(6) Sub-Advisory Agreement between A I M Advisors, Inc.
and INVESCO Management & Research, Inc. dated August
4, 1997, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on
December 30, 1997, and is incorporated by reference
herein.
(7) 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.
(8) Sub-Advisory Agreement between A I M Advisors, Inc.
and INVESCO, Inc. (formerly, INVESCO Realty Advisors,
Inc.) dated August 4, 1997, was filed electronically
as an Exhibit to Registrant's Post-Effective
Amendment No. 33 on December 30, 1997, and is
incorporated by reference herein.
(9) Sub-Advisory Agreement between A I M Advisors, Inc.
and INVESCO Global Asset Management, Inc. dated
August 4, 1997, was filed electronically as an
Exhibit with Registrant's Post-Effective Amendment
No. 34 on February 24, 1998, and is incorporated by
reference herein.
(10) Master Administrative Services Agreement, dated July
1, 1999, between Registrant and A I M Advisors, Inc.,
is filed herewith electronically.
(11) (a) Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation
Agreement, dated September 9, 1998, by and between
A I M Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's Post-
Effective Amendment No. 35 on February 16, 1999, and
is incorporated by reference herein.
(b) Amendment No. 1, dated September 28, 1998 to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated
C-2
<PAGE> 182
September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(c) Amendment No. 2, dated December 14, 1998, to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(d) Amendment No. 3, dated December 22, 1998, to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(e) Amendment No. 4, dated January 26, 1999, to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(f) Amendment No. 5, dated March 1, 1999, to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(g) Amendment No. 6, dated March 18, 1999, to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M
Advisors, Inc., is filed herewith electronically.
(h) Amendment No. 7, dated November 15, 1999, to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, between Registrant and A I M
Advisors, Inc., is filed herewith electronically.
e (1) 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.
(2) (a) Distribution Agreement between Registrant and
A I M Distributors, Inc. dated August 4, 1997, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997,
and is incorporated by reference herein.
(b) Amendment No. 1, dated as of March 2, 1998, to
the Distribution Agreement, dated August 4, 1997,
between Registrant and A I M Distributors, Inc.
(relating to Class A and Class C shares), is filed
herewith electronically.
(c) Amendment No. 2, dated as of June 21, 1999, to
the Distribution Agreement, dated August 4, 1997,
between Registrant and A I M Distributors, Inc.
(relating to Class A and Class C shares), is filed
herewith electronically.
C-3
<PAGE> 183
(3) (a) Master Distribution Agreement between Registrant
and A I M Distributors, Inc. (relating to Class B
shares) was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
(b) Amendment No. 1, dated June 21, 1999, to the
Master Distribution Agreement, dated March 3, 1998,
between Registrant and A I M Distributors, Inc.
(relating to Class B shares), is filed herewith
electronically.
(4) Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(5) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks was filed electronically
as an Exhibit to Registrant's Post-Effective
Amendment No. 35 on February 16, 1999, and is
incorporated by reference herein.
f (1) 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.
(2) 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.
(3) Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors was filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and is incorporated by reference herein.
(4) Retirement Plan for Registrant's Non-Affiliated
Directors effective as of March 8, 1994 as restated
September 18, 1995 was filed electronically as an
Exhibit to Post-Effective Amendment No. 32 on June 9,
1997 and is hereby incorporated by reference.
g (1) 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.
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's
Registration Statement on April 28, 1994. 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 filed on EDGAR with Post-Effective Amendment No.
26 on April 22, 1996.
(2) (a) Custodian Contract, dated August 4, 1997, between
Registrant and State Street Bank and Trust Company
was filed electronically as an Exhibit with
Registrant's Post-Effective Amendment No. 34 on
February 24, 1998, and is incorporated by reference
herein.
(b) Amendment to Custodian Contract dated September
9, 1998, between Registrant and State Street Bank and
Trust Company was filed electronically as an Exhibit
to Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
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h (1) (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, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997.
(c) Amended and Restated Operating Services
Agreement, dated as of July 1, 1999, between
Registrant and A I M Advisors, Inc., is filed
herewith electronically.
(2) (a) Transfer Agency and Service Agreement between
Registrant, A I M Advisors, Inc. and A I M Fund
Services, Inc. dated August 4, 1997, was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997.
(b) Amended and Restated Transfer Agency and Service
Agreement, dated July 1, 1999, between Registrant and
A I M Fund Services, Inc., is filed herewith
electronically.
(3) (a) Remote Access and Related Services Agreement,
dated as of December 23, 1994, between the Registrant
and The Shareholder Services Group, Inc. was filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and is incorporated by reference herein.
(b) Amendment No. 1, dated October 4, 1995, to the
Remote Access and First Data Investor Services Group,
Inc. (formerly The Shareholder Services Group, Inc.)
was filed electronically as an Exhibit with
Registrant's Post-Effective Amendment No. 34 on
February 24, 1998, and is incorporated by reference
herein.
(c) Addendum No. 2, dated October 12, 1995, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between Registrant and First Data
Investor Services Group, Inc. was filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and is incorporated by reference herein.
(d) Amendment No. 3, dated as of February 1, 1997, to
the Remote Access and Related Services Agreement,
dated December 23, 1994, between the Registrant and
First Data Investor Services Group, Inc. was filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and is incorporated by reference herein.
(e) Exhibit 1, effective as of August 4, 1997, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc. was filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 34 on February 24, 1998,
and is incorporated by reference herein.
(f) Preferred Registration Technology Escrow
Agreement, dated September 10, 1997, between
Registrant and First Data Investor Services Group,
Inc., was filed electronically as an Exhibit with
Registrant's Post-Effective Amendment No. 34 on
February 24, 1998, and is incorporated by reference
herein.
(g) Amendment No. 4, dated as of June 30, 1998, to
the Remote Access and Related Services Agreement,
dated December 23, 1994, between the Registrant and
First
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<PAGE> 185
Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(h) Amendment No. 5, dated July 1, 1998, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 35 on February 16, 1999,
and is incorporated by reference herein.
(i) Amendment No. 6, dated August 30, 1999, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between Registrant and First Data
Investor Services Group, Inc., is filed herewith
electronically.
(4) (a) Memorandum of Agreement, dated May 3, 1999,
between Registrant, on behalf 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, and A I M
Advisors, Inc., is filed herewith electronically.
(b) Memorandum of Agreement, dated May 3, 1999,
between Registrant, on behalf 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, and A I M
Distributors, Inc., is filed herewith electronically.
i Opinion and Consent of Ballard Spahr Andrews &
Ingersoll was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on
December 30, 1997, and is incorporated by reference
herein.
j (1) Consent of Ballard Spahr Andrews & Ingersoll, LLP is
filed herewith electronically.
(2) Consent of KPMG LLP is filed herewith electronically.
k Financial Statements - None.
l Initial Capital Agreements - Not applicable.
m (1) 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.
(2) (a) Plan and Agreement of Distribution Pursuant to
Rule 12b-1, dated August 4, 1997, between the
Registrant (on behalf of Class A and Class C shares)
and A I M Distributors, Inc. dated August 4, 1997,
was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on
December 30, 1997, and is incorporated by reference
herein.
(b) Amendment No. 1, dated as of March 2, 1998, to
the Plan and Agreement of Distribution Pursuant to
Rule 12b-1, dated August 4, 1997, between Registrant
(on behalf of Class A and Class C shares) and A I M
Distributors, Inc. is filed herewith electronically.
(c) Amendment No. 2, dated as of June 21, 1999, to
the Plan and Agreement of Distribution Pursuant to
Rule 12b-1, dated August 4, 1997, between Registrant
(on behalf of Class A and Class C shares) and A I M
Distributors, Inc. is filed herewith electronically.
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<PAGE> 186
(3) (a) Master Distribution Plan, dated as of March 3,
1998, of the Registrant (on behalf of Class B shares)
was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
(b) Amendment No. 1, dated June 21, 1999, to the
Master Distribution Plan, dated as of March 3, 1998,
of the Registrant (on behalf of Class B shares) is
filed herewith electronically.
(4) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan
was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
(5) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's Master Distribution
Plan was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
(6) Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan was filed electronically as
an Exhibit to Registrant's Post-Effective Amendment
No. 35 on February 16, 1999, and is incorporated by
reference herein.
(7) Form of Agency Pricing Agreement to be used in
connection with Registrant's Master Distribution Plan
was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
(8) 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 was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 35 on
February 16, 1999, and is incorporated by reference
herein.
n (1) A I M Management Group Inc. Code of Ethics, as
amended February 24, 2000, relating to A I M
Management Group Inc. and A I M Advisors, Inc. is
filed herewith electronically.
(2) Code of Ethics of AIM Advisor Funds, Inc., effective
as of August 4, 1997, is filed herewith
electronically.
o (1) 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.
(2) Second Amended and Restated Multiple Class Plan (Rule
18f-3) (effective September 1, 1997) was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on December 30, 1997.
(3) Third Amended and Restated Multiple Class Plan (Rule
18f-3) is filed herewith electronically.
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or
indirectly controlled by or under common control with the
Registrant. For any person controlled by another person,
disclose the
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<PAGE> 187
percentage of voting securities owned by the immediately
controlling person or other basis of that person's control.
For each company, also provide the state or other sovereign
power under the laws of which the company is organized.
None.
Item 25. Indemnification
State the general effect of any contract, arrangements or
statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified
against any liability incurred in their official capacity,
other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection.
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 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
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<PAGE> 188
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 $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
and Sub-Advisor
Describe any other business, profession, vocation or
employment of a substantial nature that each investment
advisor of the Registrant, and each director, officer or
partner of the advisor is, or has been, engaged within the two
fiscal years for his or her own account or in the capacity of
director, officer, employee, partner or trustee.
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, Inc. and INVESCO Global Asset Management Limited,
reference is made to Form ADV filed under the Investment
Advisers Act of 1940 by INVESCO, Inc. and INVESCO Global
Asset Management Limited, herein incorporated by reference.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing the Registrant's securities also acts as a
principal underwriter, depositor, or investment adviser.
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:
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<PAGE> 189
AIM Equity Funds, Inc. (Retail Classes)
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds (Retail Classes)
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(b) Provide the information required by the following table
for each director, officer, or partner of each principal
underwriter named in the response to Item 20:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Charles T. Bauer Chairman & Director Chairman & Director
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 Executive Vice President None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B.J. Thompson First Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
</TABLE>
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 190
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Randsell Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
</TABLE>
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 191
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Kathryn A. Jordan Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(c) Provide the information required by the following table for
all commissions and other compensation received, directly or
indirectly, from the Registrant during the last fiscal year by
each principal underwriter who is not an affiliated person of
the Registrant or any affiliated person of an affiliated
person.
Not applicable.
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained by
Section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
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.
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 192
Item 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B,
disclosing the parties to the contract and the total amount paid and by
whom for the Registrant's last three fiscal years.
None.
Item 30. Undertakings
In initial registration statements filed under the Securities Act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the Registrant intends to
raise its initial capital under Section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
Not Applicable
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<PAGE> 193
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 24th day of
April, 2000.
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:
SIGNATURES TITLE DATE
/s/ CHARLES T. BAUER Chairman & Director April 24, 2000
- ----------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President April 24, 2000
- ---------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director April 24, 2000
- ----------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director April 24, 2000
- ----------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Director April 24, 2000
- ----------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Director April 24, 2000
- ----------------------------
(Jack Fields)
/s/ CARL FRISCHLING Director April 24, 2000
- ----------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Director April 24, 2000
- ----------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Director April 24, 2000
- ----------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Director April 24, 2000
- ----------------------------
(Louis S. Sklar)
Vice President &
/s/ DANA R. SUTTON Treasurer (Principal Financial April 24, 2000
- ---------------------------- and Accounting Officer)
(Dana R. Sutton)
<PAGE> 194
INDEX TO EXHIBITS
Exhibit No.
- -----------
a(1)(f) Articles of Amendment, dated June 18, 1999, to the Amended and
Restated Articles of Incorporation
a(1)(g) Articles Supplementary, dated August 9, 1999, to the Amended
and Restated Articles of Incorporation, dated March 7, 1995
a(1)(h) Articles Supplementary, dated December 23, 1999, to the
Amended and Restated Articles of Incorporation, dated March 7,
1995
b(2)(b) First Amendment, dated June 9, 1999, to Amended and Restated
Bylaws of Registrant, dated September 20, 1997
d(2)(b) Amendment No. 1, dated March 2, 1998, to the Investment
Advisory Agreement, dated August 4, 1997
d(2)(c) Amendment No. 2, dated June 21, 1999, to the Investment
Advisory Agreement, dated August 4, 1997
d(10) Master Administrative Services Agreement, dated July 1, 1999,
between Registrant and A I M Advisors, Inc.
d(11)(g) Amendment No. 6, dated March 18, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between
Registrant and A I M Advisors, Inc.
d(11)(h) Amendment No. 7, dated November 15, 1999, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between
Registrant and A I M Advisors, Inc.
e(2)(b) Amendment No. 1, dated as of March 2, 1998, to the
Distribution Agreement, dated August 4, 1997, between
Registrant and A I M Distributors, Inc. (relating to Class A
and Class C shares)
e(2)(c) Amendment No. 2, dated as of June 21, 1999, to the
Distribution Agreement, dated August 4, 1997, between
Registrant and A I M Distributors, Inc. (relating to Class A
and Class C shares)
e(3)(b) Amendment No. 1, dated June 21,1999, to the Master
Distribution Agreement, dated March 3, 1998, between
Registrant and A I M Distributors, Inc. (relating to Class B
shares)
h(1)(c) Amended and Restated Operating Services Agreement, dated as of
July 1, 1999, between Registrant and A I M Advisors, Inc.
h(2)(b) Amended and Restated Transfer Agency and Service Agreement,
dated July 1, 1999, between Registrant and A I M Fund
Services, Inc.
h(3)(i) Amendment No. 6, dated August 30, 1999, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group,
Inc.
h(4)(a) Memorandum of Agreement, dated May 3, 1999, between
Registrant, on behalf 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,
and A I M Advisors, Inc.
<PAGE> 195
h(4)(b) Memorandum of Agreement, dated May 3, 1999, between
Registrant, on behalf 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,
and A I M Distributors, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of KPMG LLP
m(2)(b) Amendment No. 1, dated as of March 2, 1998, to the Plan and
Agreement of Distribution Pursuant to Rule 12b-1, dated August
4, 1997, between Registrant (on behalf of Class A and Class C
shares) and A I M Distributors, Inc.
m(2)(c) Amendment No. 2, dated as of June 21, 1999, to the Plan and
Agreement of Distribution Pursuant to Rule 12b-1, dated August
4, 1997, between Registrant (on behalf of Class A and Class C
shares), and A I M Distributors, Inc.
m(3)(b) Amendment No. 1, dated June 21, 1999, to the Master
Distribution Plan, dated as of March 3, 1998, of the
Registrant (on behalf of Class B shares)
n(1) AIM Management Group Inc. Code of Ethics, as amended February
24, 2000
n(2) Code of Ethics of AIM Advisor Funds, Inc., effective as of
August 4, 1997
o(3) Third Amended and Restated Multiple Class Plan (Rule 18f-3)
<PAGE> 1
EXHIBIT a(1)(f)
AIM ADVISOR FUNDS, INC.
ARTICLES OF AMENDMENT
AIM ADVISORS 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 (the ADepartment@) that:
FIRST: The Board of Directors of the Corporation has duly advised and
adopted, and the shareholders of the AIM Advisor MultiFlex Fund (AMulti-Flex@
Fund) have duly approved, a Plan of Reorganization for MultiFlex Fund, a series
of shares of the Corporation, that provides for the filing of these Articles of
Amendment pursuant to which: (i) the issued and outstanding Class A Shares,
Class B Shares and Class C Shares of MultiFlex Fund will be changed into Class A
Shares, Class B Shares and Class C Shares, respectively, of AIM Advisor Flex
Fund (AFlex Fund@), another series of shares of the Corporation; and (ii) after
such change, the authorized Class A Shares, Class B Shares and Class C Shares of
MultiFlex Fund (including the previously issued and outstanding shares which
were changed into shares of Flex Fund) will be reclassified as shares of common
stock, par value $.001 per share, of the Corporation without further designation
or classification, on the following terms:
(a) CHANGE OF OUTSTANDING SHARES. On the Effective Date of these Articles
of Amendment:
(i) all of the issued and outstanding Class A Shares of MultiFlex
Fund shall be changed into Class A Shares of Flex Fund currently
authorized based upon their respective net asset values, and
thereafter shall have the attributes of Class A Shares of Flex Fund;
<PAGE> 2
(ii) all of the issued and outstanding Class B Shares of MultiFlex
Fund shall be changed into Class B Shares of Flex Fund currently
authorized based upon their respective net asset values, and
thereafter shall have the attributes of Class B Shares of Flex Fund;
and
(iii) all of the issued and outstanding Class C Shares of MultiFlex
Fund shall be changed into Class C Shares of Flex Fund currently
authorized based upon their respective net assets values, and
thereafter shall have the attributes of Class C Shares of Flex Fund.
(iv) immediately following such changes, all previously issued and
outstanding Class A Shares, Class B Shares and Class C Shares of
Multiflex Fund shall become authorized but unissued Class A Shares,
Class B Shares and Class C Shares, respectively of Multiflex Fund.
(b) ATTRIBUTION OF ASSETS AND LIABILITIES. On the Effective Date of these
Articles of Amendment:
(i) the proportionate undivided interest in the net assets of
MultiFlex Fund attributable to its Class A Shares shall become a part
of the proportionate undivided interest in the net assets of Flex Fund
attributable to its Class A Shares and the expenses, costs, charges
and reserves allocated to the Class A Shares of MultiFlex Fund
immediately prior to the Effective Date shall become expenses, costs,
charges and reserves of Class A Shares of Flex Fund;
(ii) the proportionate undivided interest in the net assets of
MultiFlex Fund attributable to its Class B Shares shall become a part
of the proportionate undivided interest in the net assets of Flex Fund
attributable to its Class B Shares and the expenses, costs, charges
and reserves allocated to the Class B Shares of MultiFlex Fund
immediately prior to the Effective Date shall become expenses, costs,
charges and reserves of Class B Shares of Flex Fund; and
<PAGE> 3
(iii) the proportionate undivided interest in the net assets of
MultiFlex Fund attributable to its Class C Shares shall become a part
of the proportionate undivided interest in the net assets of Flex Fund
attributable to its Class C Shares and the expenses, costs, charges
and reserves allocated to the Class C Shares of MultiFlex Fund
immediately prior to the Effective Date shall become expenses, costs,
charges and reserves of Class C Shares of Flex Fund.
(c) SHAREHOLDER ACCOUNTS. On the Effective Date of these Articles of
Amendment:
(i) each shareholder of record of Class A Shares of MultiFlex Fund
will receive that number of Class A Shares of Flex Fund currently
authorized having an aggregate net asset value equal to the aggregate
net asset value of the Class A Shares of MultiFlex Fund held by such
shareholder immediately prior to the Effective Date;
(ii) each shareholder of record of Class B Shares of MultiFlex Fund
will receive that number of Class B Shares of Flex Fund currently
authorized having an aggregate net asset value equal to the aggregate
net asset value of the Class B Shares of MultiFlex Fund held by such
shareholder immediately prior to the Effective Date; and,
(iii) each shareholder of record of Class C Shares of MultiFlex Fund
will receive that number of Class C Shares of Flex Fund currently
authorized having an aggregate net asset value equal to the aggregate
net asset value of the Class C Shares of MultiFlex Fund held by such
shareholder immediately prior to the Effective Date.
(d) RECLASSIFICATION OF MULTIFLEX FUND SHARES. On the Effective Date of
these Articles of Amendment and after completion of the actions and events
described in paragraphs (a), (b) and (c) of this Article First, all of the
100,000,000 Class A Shares, 100,000,000 Class B Shares and 100,000,000
Class C shares of MultiFlex Fund previously authorized shall be
reclassified as shares of common stock, par value $.001 per share of the
Corporation having no further designation or classification and shall
thereafter be authorized but unissued shares of stock of the
<PAGE> 4
Corporation without further designation or classification.
The charter of the Corporation is hereby amended as provided in this
Article First.
SECOND: These Articles of Amendment are adopted under the authority
contained in Section 2-602(b)(3) and Section 2-602(b)(8) of the Maryland General
Corporation Law (the AMGCL@). The amendments to the Charter of the Corporation
set forth herein were duly advised and adopted by the Board of Directors of the
Corporation, and duly approved by the stockholders of the Corporation entitled
to vote thereon, as required by law.
THIRD: The amendments to the Charter set forth herein do not increase the
authorized stock of the Corporation.
FOURTH: The Effective Date of these Articles of Amendment shall be June 21,
1999, at 8:00 a.m. Eastern Time.
The undersigned President acknowledges these Articles of Amendment 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 of Amendment with respect to authorization and approval are true in all
material respects and that this statement is made under the penalties for
perjury.
<PAGE> 5
IN WITNESS WHEREOF, AIM ADVISOR FUNDS, INC. has caused these Articles of
Amendment to be executed in its name and on its behalf by its President and
witnessed by its Secretary on June 18, 1999.
AIM ADVISOR FUNDS, INC.
Witness:
/s/ CAROL F. RELIHAN /s/ ROBERT H. GRAHAM
- ---------------------- ----------------------
Carol F. Relihan Robert H. Graham
Secretary President
<PAGE> 1
EXHIBIT a(1)(g)
AIM ADVISOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM ADVISOR FUNDS, INC., a Maryland corporation 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: Immediately prior to the filing of these Articles of Supplementary
the total number of shares of stock of all classes which the Corporation was
authorized to issue was 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. The total
number of shares of stock of all classes which the Corporation has authority to
issue is not changed by these Articles Supplementary.
SECOND: Immediately prior to the filing of these Articles Supplementary
the Corporation's authorized shares had been classified and designated as
follows:
(1) Class A Shares:
AIM Advisor Large Cap Value Fund Class A Shares - 100,000,000
AIM Advisor Income Fund Class A Shares - 5,000,000
AIM Advisor Flex Fund Class A Shares - 100,000,000
AIM Advisor Real Estate Fund Class A Shares - 100,000,000
AIM Advisor International Value Fund Class A Shares - 100,000,000
AIM Advisor Cash Management Fund Class A Shares - 4,000,000,000;
<PAGE> 2
(2) Class B Shares:
AIM Advisor Large Cap Value Fund Class B Shares - 100,000,000
AIM Advisor Flex Fund Class B Shares - 100,000,000
AIM Advisor Real Estate Fund Class B Shares - 100,000,000
AIM Advisor International Value Fund Class B Shares - 100,000,000;
(3) Class C Shares:
AIM Advisor Large Cap Value Fund Class C Shares - 100,000,000
AIM Advisor Income Fund Class C Shares - 5,000,000
AIM Advisor Flex Fund Class C Shares - 100,000,000
AIM Advisor Real Estate Fund Class C Shares - 100,000,000
AIM Advisor International Value Fund Class C Shares - 100,000,000
AIM Advisor Cash Management Fund Class C Shares - 4,000,000,000; and
(4) 865,000,000 shares are shares of stock without further designation or
classification.
THIRD: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
FOURTH: The total number of shares of capital stock that the Corporation
has the authority to issue has been reclassified by the Board of Directors in
accordance with Section 2-105(c) of the Maryland General Corporation Law and
pursuant to the authority contained in the
2
<PAGE> 3
charter of the Corporation. None of the issued and outstanding shares of stock
of the Corporation have been reclassified by such action of the Board of
Directors.
FIFTH: As of the filing of these Articles Supplementary, the Corporation's
authorized shares shall be classified and designated as follows:
(a) Class A Shares:
AIM Advisor Large Cap Value Fund Class A Shares - 100,000,000
AIM Advisor Flex Fund Class A Shares - 100,000,000
AIM Advisor Real Estate Fund Class A Shares - 100,000,000
AIM Advisor International Value Fund Class A Shares - 100,000,000
(2) Class B Shares:
AIM Advisor Large Cap Value Fund Class B Shares - 100,000,000
AIM Advisor Flex Fund Class B Shares - 100,000,000
AIM Advisor Real Estate Fund Class B Shares - 100,000,000
AIM Advisor International Value Fund Class B Shares - 100,000,000
(3) Class C Shares:
AIM Advisor Large Cap Value Fund Class C Shares - 100,000,000
AIM Advisor Flex Fund Class C Shares - 100,000,000
AIM Advisor Real Estate Fund Class C Shares - 100,000,000
AIM Advisor International Value Fund Class C Shares - 100,000,000;
and
3
<PAGE> 4
(4) 8,875,000,000 shares are shares of stock without further designation
or classification.
SIXTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as dividends, qualifications and terms and conditions
of redemption of the Class A Shares, Class B Shares and Class C Shares described
in ARTICLE FIFTH hereof shall be those previously designated in the Charter of
the Corporation and shall remain unchanged.
SEVENTH: The undersigned Senior Vice President of the Corporation
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 Supplementary with
respect to authorization and approval are true in all material respects and that
this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, AIM ADVISOR FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its Senior Vice
President and witnessed by its Assistant Secretary on August 9, 1999.
AIM ADVISOR FUNDS, INC.
Witness:
/s/ OFELIA M. MAYO /s/ CAROL F. RELIHAN
- ----------------------------- -----------------------------
Assistant Secretary Senior Vice President
4
<PAGE> 1
EXHIBIT a(1)(h)
AIM ADVISOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM ADVISOR FUNDS, INC., a Maryland corporation (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, by resolutions duly
adopted at a meeting duly called and held on December 8, 1999, has:
(a) increased the aggregate number of shares of stock that the Corporation
has authority to issue from Ten Billion Seventy-Five Million
(10,075,000,000) to Fourteen Billion Seven Hundred Seventy-Six Million
Five Hundred Thousand (14,776,500,000) shares,
(b) classified and designated such newly authorized shares (collectively,
the "Shares") as follows:
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Flex Fund - Class A Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Flex Fund - Class B Shares,
Forty-Four Million (44,000,000) shares as shares of the AIM
Advisor Flex Fund - Class C Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
International Value Fund - Class A Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
International Value Fund - Class B Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
International Value Fund - Class C Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Large Cap Value Fund - Class A Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Large Cap Value Fund - Class B Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Large Cap Value Fund - Class C Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Real Estate Fund - Class A Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Real Estate Fund - Class B Shares,
Twenty Million (20,000,000) shares as shares of the AIM Advisor
Real Estate Fund - Class C Shares, and
Four Billion Four Hundred Thirty-Seven Million Five Hundred
Thousand (4,437,500,000) shares are unclassified,
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption of shares of stock as set forth in
ARTICLE IV of the Charter of the Corporation (the "Charter"), in any
other provisions of the Charter relating to the stock of the
Corporation generally and in ARTICLE SIXTH of the Corporation's
Articles Supplementary dated September 29, 1997 as filed with the
State Department of Assessments and Taxation of Maryland, and
(c) ratified and confirmed the issuance of shares of Common Stock of the
Corporation, of each class of whatever portfolio, as reflected in the
records of the Corporation, and further declared and confirmed that
each such share, of whatever class of whatever portfolio, is duly
authorized, validly issued, fully paid and nonassessable.
<PAGE> 2
SECOND: Immediately prior to the filing of these Articles Supplementary,
the Corporation had authority to issue Ten Billion Seventy-Five Million
(10,075,000,000) shares, $.001 par value per share, having an aggregate par
value of $10,075,000, of which:
(a) One Hundred Million (100,000,000) shares are classified as AIM Advisor
Flex Fund -- Class A Shares, One Hundred Million (100,000,000) shares
are classified as AIM Advisor International Value Fund -- Class A
Shares, One Hundred Million (100,000,000) shares are classified as AIM
Advisor Large Cap Value Fund -- Class A Shares and One Hundred Million
(100,000,000) shares are classified as AIM Advisor Real Estate Fund --
Class A Shares;
(b) One Hundred Million (100,000,000) shares are classified as AIM
Advisor Flex Fund -- Class B Shares, One Hundred Million (100,000,000)
shares are classified as AIM Advisor International Value Fund -- Class
B Shares, One Hundred Million (100,000,000) shares are classified as
AIM Advisor Large Cap Value Fund -- Class B Shares and One Hundred
Million (100,000,000) shares are classified as AIM Advisor Real Estate
Fund -- Class B Shares;
(c) One Hundred Million (100,000,000) shares are classified as AIM Advisor
Flex Fund -- Class C Shares, One Hundred Million (100,000,000) shares
are classified as AIM Advisor International Value Fund -- Class C
Shares, One Hundred Million (100,000,000) shares are classified as AIM
Advisor Large Cap Value Fund -- Class C Shares and One Hundred Million
(100,000,000) shares are classified as AIM Advisor Real Estate Fund --
Class C Shares; and
(d) Eight Billion Eight Hundred Seventy-Five Million (8,875,000,000)
shares are unclassified.
THIRD: As of the filing of these Articles Supplementary, the Corporation
shall have authority to issue Fourteen Billion Seven Hundred Seventy-Six Million
Five Hundred Thousand (14,776,500,000) shares, $.001 par value per share, having
an aggregate par value of $14,776,500, of which:
(a) One Hundred Twenty Million (120,000,000) shares are classified as AIM
Advisor Flex Fund -- Class A Shares, One Hundred Twenty Million
(120,000,000) shares are classified as AIM Advisor International Value
Fund -- Class A Shares, One Hundred Twenty Million (120,000,000)
shares are classified as AIM Advisor Large Cap Value Fund -- Class A
Shares and One Hundred Twenty Million (120,000,000) shares are
classified as AIM Advisor Real Estate Fund -- Class A Shares;
(b) One Hundred Twenty Million (120,000,000) shares are classified as AIM
Advisor Flex Fund -- Class B Shares, One Hundred Twenty Million
(120,000,000) shares are classified as AIM Advisor International Value
Fund -- Class B Shares, One Hundred Twenty Million (120,000,000)
shares are classified as AIM Advisor Large Cap Value Fund -- Class B
Shares and One Hundred Twenty Million (120,000,000) shares are
classified as AIM Advisor Real Estate Fund -- Class B Shares;
(c) One Hundred Forty-Four Million (144,000,000) shares are classified as
AIM Advisor Flex Fund -- Class C Shares, One Hundred Twenty Million
(120,000,000) shares are classified as AIM Advisor International Value
Fund -- Class C Shares, One Hundred Twenty Million (120,000,000)
shares are classified as AIM Advisor Large Cap Value Fund -- Class C
Shares and One Hundred Twenty Million (120,000,000) shares are
classified as AIM Advisor Real Estate Fund -- Class C Shares; and
(d) Thirteen Billion Three Hundred Twelve Million Five Hundred Thousand
(13,312,500,000) shares are unclassified.
FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
2
<PAGE> 3
FIFTH: The total number of shares of capital stock that the Corporation
had authority to issue immediately prior to the filing of these Articles
Supplementary was increased and such additional shares were classified by the
Board of Directors of the Corporation in accordance with section 2-105(c) of
the Maryland General Corporation Law.
SIXTH: The Shares were classified by the Board of Directors of the
Corporation under authority granted to it in ARTICLE IV, section 1 of the
Charter.
The undersigned Vice President acknowledges these Articles Supplementary to
be the corporate act of the Corporation and states that to the best of his or
her knowledge, information and belief, the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, AIM ADVISOR FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on December 23, 1999.
AIM ADVISOR FUNDS, INC.
Witness:
/s/ KATHLEEN J. PFLUEGER By: /s/ MELVILLE B. COX
------------------------ ----------------------------
Assistant Secretary Vice President
3
<PAGE> 1
EXHIBIT b(2)(b)
FIRST AMENDMENT TO AMENDED AND RESTATED
BYLAWS OF AIM ADVISOR FUNDS, INC.
(A MARYLAND CORPORATION)
ADOPTED JUNE 9, 1999
The Bylaws of AIM Advisor Funds, Inc. are hereby amended as follows:
WHEREAS, the Board of Directors of the Fund desires to modify the
manner in which a chairman is appointed to preside at each shareholder
meeting;
NOW THEREFORE BE IT RESOLVED, that paragraph (a) of Article I,
Section 8 of each Funds Bylaws be, and it hereby is, amended by
deleting paragraph (a) of Article I, Section 8 in its entirety and
replacing it with the following:
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 appointed for such purpose by the Board of Directors
or, if not so appointed, by a chairman appointed for such
purpose by the officers and Directors present 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.
<PAGE> 1
EXHIBIT d(2)(b)
AMENDMENT NO. 1
INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of March 2, 1998, amends the Investment
Advisory Agreement (the "Agreement"), dated August 4, 1997, between AIM Advisor
Funds, Inc., a Maryland corporation, and A I M Advisors, Inc., a Delaware
corporation.
Schedule A to the Agreement is hereby deleted in its entirety and
replaced with the following:
"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%"
</TABLE>
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
A I M ADVISOR FUNDS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT d(2)(c)
AMENDMENT NO. 2
INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of June 21, 1999, amends the Investment
Advisory Agreement (the "Agreement"), dated August 4, 1997, as amended as of
March 2, 1998 between AIM Advisor Funds, Inc., a Maryland corporation, and A I M
Advisors, Inc., a Delaware corporation.
Schedule A to the Agreement is hereby deleted in its entirety and
replaced with the following:
"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 International Value Fund 1.00%"
</TABLE>
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
A I M ADVISOR FUNDS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
----------------------------- ------------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------------- ------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT d(10)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made
this 1st day of July, 1999 by and between A I M ADVISORS, INC., a Delaware
corporation (the "Administrator") and AIM ADVISOR FUNDS, INC., a Maryland
corporation (the "Company") with respect to the separate series set forth from
time to time in Appendix A to this Agreement (the "Portfolios").
W I T N E S S E T H:
---------------------
WHEREAS, the Company is an open-end investment company registered under
the Investment Company Act of 1940, as amended ("the 1940 Act"); and
WHEREAS, the Portfolios are separate series of common stock
representing interests in separate investment portfolios of the Company; and
WHEREAS, the Company, on behalf of the Portfolios, has retained the
Administrator to provide various operating services pursuant to an Amended and
Restated Operating Services Agreement (the "Operating Services Agreement"); and
WHEREAS, the Operating Services Agreement provides that the
Administrator shall provide (or assist the Company in retaining others to
provide) among other services, accounting, shareholder servicing and other
administrative services, and provides that the Administrator may receive
reasonable compensation or may be reimbursed for its costs in providing such
services; and
WHEREAS, the Administrator and the Company desire to enter into this
Agreement to establish the terms under which the Administrator will provide
certain of such services, and the compensation to be paid to the Administrator
for such services;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the
provision of, any or all of the following services by the Administrator or its
affiliates:
(a) the services of a principal financial officer of the Company
(including related office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and
records of the Company and the Portfolios, including the review of
daily net asset value calculations and the preparation of tax returns;
and the services (including related office space, facilities and
equipment) of any of the personnel operating under the direction of
such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Administrator; changing account designations or changing addresses;
assisting in the purchase or redemption of shares of the Portfolios;
supervising the operations of the custodian(s), transfer agent(s) or
dividend agent(s) for the Portfolios; or otherwise providing services
to shareholders of the Portfolios; and
<PAGE> 2
(c) such other administrative services as may be furnished from time to
time by the Administrator to the Company or the Portfolios at the
request of the Company's Board of Directors.
2. The services provided hereunder shall at all times be subject to the
direction and supervision of the Company's Board of Directors.
3. As full compensation for the services performed and the facilities
furnished by or at the direction of the Administrator, the Portfolios shall
reimburse the Administrator for expenses incurred by them or their affiliates in
accordance with the methodologies established from time to time by the Company's
Board of Directors. Such amounts shall be paid to the Administrator on a
quarterly basis.
4. The Administrator shall not be liable for any error of judgment or
for any loss suffered by the Company or the Portfolios in connection with any
matter to which this Agreement relates, except a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
5. The Company and the Administrator each hereby represent and warrant,
but only as to themselves, that each has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement and that this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
6. Nothing in this Agreement shall limit or restrict the rights of any
director, officer or employee of the Administrator who may also be a director,
officer or employee of the Company to engage in any other business or to devote
his time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
right of the Administrator to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
7. This Agreement shall continue in effect until June 30, 2001 and
shall continue in effect from year to year thereafter; provided that such
continuance is specifically approved at least annually:
(a) (i) by the Company's Board of Directors or (ii) by the vote of a
majority of the outstanding voting securities of the Company (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Company's directors
who are not parties to this Agreement or interested persons of a party
to this Agreement, by votes cast in person at a meeting specifically
called for such purpose.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the 1940 Act) or, with respect to
one or more Portfolios in the event of termination of the Master Investment
Advisory Agreement relating to such Portfolio(s) between the Company and the
Administrator.
2
<PAGE> 3
8. This Agreement may be amended or modified, but only by a written
instrument signed by both the Company and the Administrator.
9. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite
100, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite 100, Houston,
Texas 77046, Attention: President, with a copy to the General Counsel.
10. This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
A I M ADVISORS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
(SEAL)
AIM ADVISOR FUNDS, INC.
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
(SEAL)
3
<PAGE> 4
AIM ADVISOR FUNDS, INC.
APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
JULY 1, 1999
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund
4
<PAGE> 1
EXHIBIT d(11)(g)
AMENDMENT NO. 6
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 6, dated as of March 18, 1999, amends the Foreign
Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between A I M Advisors, Inc., a
Delaware corporation and each registered Investment company (the "Investment
Companies") and its respective portfolios (the "Funds") listed on the signature
page thereof (as amended and supplemented, the "Agreement").
NOW, THEREFORE, the parties agree as follows;
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to include the following portfolios of AIM Equity Funds,
Inc.:
AIM Dent Demographic Trends Fund
AIM Growth and Income Fund
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to delete the following portfolio of AIM Investment
Funds:
AIM Emerging Markets Fund
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to delete the following portfolios of AIM Growth Series:
AIM International Growth Fund
AIM Worldwide Growth Fund
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. 5 to be
executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ CAROL F. RELIHAN
------------------------- --------------------------------
Assistant Secretary Senior Vice President
AIM ADVISOR FUNDS, INC. AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Flex Fund AIM Asian Growth Fund
AIM Advisor International Value Fund AIM European Development Fund
AIM Advisor Large Cap Value Fund AIM International Equity Fund
AIM Advisor MultiFlex Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Global Income Fund
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Blue Chip Fund AIM V.I. Aggressive Growth Fund
AIM Capital Development Fund AIM V.I. Balanced Fund
AIM Charter Fund AIM V.I. Capital Appreciation Fund
AIM Constellation Fund AIM V.I. Capital Development Fund
AIM Dent Demographic Trends Fund AIM V.I. Diversified Income Fund
AIM Growth and Income Fund AIM V.I. Global Growth and Income Fund
AIM Large Cap Growth Fund AIM V.I. Global Utilities Fund
AIM Weingarten Fund AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM FUNDS GROUP AIM V.I. Growth & Income Fund
AIM Balanced Fund AIM V.I. High Yield Fund
AIM Global Utilities Fund AIM V.I. International Equity Fund
AIM High Yield Fund AIM V.I. Money Market Fund
AIM Income Fund AIM V.I. Telecommunications Fund
AIM Money Market Fund AIM V.I. Value Fund
AIM Select Growth Fund
AIM Value Fund EMERGING MARKETS DEBT PORTFOLIO
AIM INVESTMENT SECURITIES FUNDS GROWTH PORTFOLIO
AIM High Yield Fund II Small Cap Portfolio
Value Portfolio
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
AIM Mid Cap Opportunities Fund
AIM SUMMIT FUND, INC.
<PAGE> 3
GLOBAL INVESTMENT PORTFOLIO AIM GROWTH SERIES
Global Consumer Products and Services AIM New Pacific Growth Fund
Portfolio AIM Europe Growth Fund
Global Financial Services Portfolio AIM Japan Growth Fund
Global Infrastructure Portfolio AIM Mid Cap Equity Fund
Global Natural Resources Portfolio AIM Small Cap Growth Fund
AIM Basic Value Fund
GT GLOBAL FLOATING RATE FUND, INC.
(doing business as AIM Floating Rate GT GLOBAL VARIABLE INVESTMENT TRUST
Fund) GT Global Variable Latin America Fund
AIM SERIES TRUST GT Global Variable Telecommunications
AIM Global Trends Fund Fund
GT Global Variable Growth & Income Fund
FLOATING RATE PORTFOLIO GT Global Variable Strategic Income Fund
GT Global Variable Emerging Markets Fund
AIM EASTERN EUROPE FUND GT Global Variable Government Income
Fund
AIM INVESTMENT FUNDS GT Global Variable U.S. Government
AIM Global Government Income Fund Income Fund
AIM Strategic Income Fund GT Global Variable Infrastructure Fund
AIM Emerging Markets Debt Fund GT Global Variable Natural Resources
AIM Global Growth & Income Fund Fund
AIM Developing Markets Fund
AIM Latin American Growth Fund GT GLOBAL VARIABLE INVESTMENT SERIES
AIM Global Financial Services Fund GT Global Variable New Pacific Fund
AIM Global Health Care Fund GT Global Variable Europe Fund
AIM Global Telecommunications Fund GT Global Variable America Fund
AIM Global Consumer Products and GT Global Variable International Fund
Services Fund GT Global Variable Money Market Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
-------------------------- ------------------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT d(11)(h)
AMENDMENT NO. 7
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 7, dated as of November 15, 1999, amends the
Foreign Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between A I M Advisors, Inc., a
Delaware corporation and each registered investment company (the "Investment
Companies") and its respective portfolios (the "Funds") listed on the signature
page thereof (as amended and supplemented, the "Agreement").
NOW, THEREFORE, the parties agree as follows;
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Equity
Funds, Inc.:
AIM Mid Cap Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Special
Opportunities Funds:
AIM Large Cap Opportunities Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolios of AIM
Variable Insurance Funds, Inc.:
AIM V.I. Blue Chip Fund
AIM V.I. Dent Demographic Trends Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following portfolio of AIM Advisor
Funds, Inc.:
AIM Advisor MultiFlex Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund:
AIM Eastern Europe Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
1
<PAGE> 2
GT Global Variable Investment Trust
-----------------------------------
GT Global Variable Emerging Markets Fund
GT Global Variable Government Income Fund
GT Global Variable Growth & Income Fund
GT Global Variable Infrastructure Fund
GT Global Variable Latin America Fund
GT Global Variable Natural Resources Fund
GT Global Variable Strategic Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable U.S. Government Income Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
GT Global Variable Investment Series
------------------------------------
GT Global Variable America Fund
GT Global Variable Europe Fund
GT Global Variable International Fund
GT Global Variable Money Market Fund
GT Global Variable New Pacific Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Equity
Funds, Inc.:
AIM Growth and Income Fund, renamed as AIM Large Cap Basic
Value Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Growth
Series:
AIM Europe Growth Fund, renamed as AIM Euroland Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM
Investment Funds:
AIM Global Telecommunications Fund, renamed as AIM Global
Telecommunications and Technology Fund
In all other respects, the Agreement is hereby confirmed and remains
in full force and effect.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment No. 7
to be executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/P. MICHELLE GRACE By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
AIM ADVISOR FUNDS, INC. AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Flex Fund AIM Asian Growth Fund
AIM Advisor International Value Fund AIM European Development Fund
AIM Advisor Large Cap Value Fund AIM International Equity Fund
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Income Fund
AIM Aggressive Growth Fund
AIM Blue Chip Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Capital Development Fund AIM V.I. Aggressive Growth Fund
AIM Charter Fund AIM V.I. Balanced Fund
AIM Constellation Fund AIM V.I. Blue Chip Fund
AIM Dent Demographic Trends Fund AIM V.I. Capital Appreciation Fund
AIM Large Cap Basic Value Fund AIM V.I. Capital Development Fund
AIM Large Cap Growth Fund AIM V.I. Dent Demographic Trends Fund
AIM Mid Cap Growth Fund AIM V.I. Diversified Income Fund
AIM Weingarten Fund AIM V.I. Global Growth and Income Fund
AIM V.I. Global Utilities Fund
AIM FUNDS GROUP AIM V.I. Government Securities Fund
AIM Balanced Fund AIM V.I. Growth Fund
AIM Global Utilities Fund AIM V.I. Growth & Income Fund
AIM High Yield Fund AIM V.I. High Yield Fund
AIM Income Fund AIM V.I. International Equity Fund
AIM Money Market Fund AIM V.I. Money Market Fund
AIM Select Growth Fund AIM V.I. Telecommunications Fund
AIM Value Fund AIM V.I. Value Fund
AIM INVESTMENT SECURITIES FUNDS EMERGING MARKETS DEBT PORTFOLIO
AIM High Yield Fund II
GROWTH PORTFOLIO
AIM SPECIAL OPPORTUNITIES FUNDS Small Cap Portfolio
AIM Large Cap Opportunities Fund Value Portfolio
AIM Mid Cap Opportunities Fund
AIM Small Cap Opportunities Fund
AIM SUMMIT FUND, INC.
3
<PAGE> 4
GLOBAL INVESTMENT PORTFOLIO AIM INVESTMENT FUNDS
Global Consumer Products and AIM Developing Markets Fund
Services Portfolio AIM Emerging Markets Debt Fund
Global Financial Services Portfolio AIM Global Consumer Products and
Global Infrastructure Portfolio Services Fund
Global Natural Resources Portfolio AIM Global Financial Services Fund
AIM Global Government Income Fund
GT GLOBAL FLOATING RATE FUND, INC. AIM Global Growth & Income Fund
(doing business as AIM Floating AIM Global Health Care Fund
Rate Fund) AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM SERIES TRUST AIM Global Telecommunications and
AIM Global Trends Fund Technology Fund
AIM Latin American Growth Fund
FLOATING RATE PORTFOLIO AIM Strategic Income Fund
AIM GROWTH SERIES
AIM Basic Value Fund
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
Attest: /s/OFELIA M. MAYO By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
4
<PAGE> 1
EXHIBIT e(2)(b)
AMENDMENT NO. 1
DISTRIBUTION AGREEMENT
This Amendment dated as of March 2, 1998 amends the Distribution
Agreement (the "Agreement"), dated August 4, 1997, 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").
The first WHEREAS clause of the Agreement is hereby deleted in its
entirety and replaced with the following:
"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 Flex Fund, AIM
Advisor MultiFlex Fund, AIM Advisor Real Estate Fund, and AIM Advisor
International Value 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"
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ STEPHEN I. WINER 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
<PAGE> 1
EXHIBIT e(2)(c)
AMENDMENT NO. 2
DISTRIBUTION AGREEMENT
(CLASS A AND CLASS C SHARES)
This Amendment dated as of June 21, 1999 amends the Distribution
Agreement (the "Agreement"), dated August 4, 1997, as amended as of March 3,
1998 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").
The first WHEREAS clause of the Agreement is hereby deleted in its
entirety and replaced with the following:
"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 the current following series, AIM Advisor Large Cap Value Fund, AIM
Advisor Flex Fund, AIM Advisor Real Estate Fund, and AIM Advisor International
Value Fund each of which series offers two classes of Shares pursuant to this
Agreement 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"
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
ATTEST: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------------ ----------------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT e(3)(b)
AMENDMENT NO. 1
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM ADVISOR FUNDS, INC.
AND
(CLASS B SHARES)
A I M DISTRIBUTORS, INC.
This Amendment dated as of June 21, 1999, amends the Master
Distribution Agreement (the "Agreement"), dated March 3, 1998, by and between
AIM Advisor Funds, Inc., a Maryland corporation (the "Company"), and A I M
Distributors, Inc., a Delaware corporation (the "Distributor"), is hereby
amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"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 Real Estate Fund"
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
AIM ADVISOR FUNDS, INC.
Attest:
/s/ OFELIA M. MAYO /s/ ROBERT H. GRAHAM
- ------------------------------ ----------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest:
/s/ LISA A. MOSS /s/ MICHAEL J. CEMO
- ------------------------------ ----------------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT h(1)(c)
AMENDED AND RESTATED OPERATING SERVICES AGREEMENT
AGREEMENT made as of August 4, 1997, as amended and restated as of July
1, 1999, 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. The Fund has classified its shares into classes
representing interests in four separate portfolios of investments: AIM Advisor
Large Cap Value Fund, AIM Advisor Flex Fund, AIM Advisor Real Estate Fund and
AIM Advisor International Value Fund (each, a "Portfolio" and collectively the
"Portfolios"); 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 services to
certain investment companies, including the Fund; and
WHEREAS, the Fund desires to retain AIM and other persons to render
certain operational services which are necessary for the day-to-day operations
of the Portfolios (the "Services") in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, AIM desires to be retained to perform certain of such Services
and to assist the Fund in retaining other persons to perform the remainder of
such Services, on said terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, and intending to be legally bound, the Fund and AIM agree as follows:
1. The Fund hereby retains AIM to provide to the Portfolios:
a. such internal accounting services and functions as are reasonably
necessary for the operations of the Portfolios;
b. such internal legal services and functions as are reasonably
necessary for the operations of the Portfolios;
c. such services in preparing periodic reports to shareholders,
including annual and semiannual reports, and prospectuses and
statements of additional information to existing shareholders, as
are reasonably necessary for the operations of the Portfolios; and
<PAGE> 2
d. such services as are necessary to organize a new Portfolio or class
thereof, including:
i. the initial registration and qualification of new Portfolios
or classes under the Act and under the Securities Act of 1933,
as amended,
ii. the initial determination of the tax status of new Portfolios
or classes and any rulings obtained for this purpose, and
iii. the initial registration and qualification of securities of
new Portfolios or classes under the laws of any state and the
approval of the operations of new Portfolios or classes by any
other federal or state authority.
2. The Fund hereby retains AIM to assist the Fund in retaining other
persons, including affiliates of AIM, to provide to the Portfolios:
a. such services of independent public accountants as are reasonably
necessary for the operation of the Portfolios;
b. such legal services of any outside legal counsel 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
Portfolios;
c. such dividend disbursing agent, dividend reinvestment agent,
transfer agent, and registrar services and functions (including
answering inquiries related to shareholder Fund accounts and sending
dividend notices to shareholders) as are reasonably necessary for
the operation of the Portfolios;
d. such custodian and depository services and functions as are
reasonably necessary for the operation of the Portfolios;
e. such independent pricing services as are reasonably necessary for
the operation of the Portfolios;
f. 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 4, 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, as are reasonably necessary for the operation
of the Portfolios; and
g. such other administrative services and functions (other than those
administrative responsibilities specifically assumed by AIM under
the Investment Advisory Agreement), including
2
<PAGE> 3
i. maintaining the registration and qualification of the
Fund and the shares of its Portfolios under laws
administered by the Securities and Exchange Commission,
the various states, or under other applicable regulatory
requirements,
ii. printing and distributing prospectuses, statements of
additional information, annual and semiannual reports to
shareholders, notices of shareholders' meetings, proxy
statements, and other communications to the Fund's
shareholders,
iii. holding shareholders' meetings and Directors' meetings,
iv. obtaining insurance and obtaining the fidelity bond
maintained by the Fund pursuant to Section 17(g) of the
Investment Company Act and rules promulgated thereunder,
v. designing, printing, and issuing certificates
representing shares of the Portfolios, and
vi. obtaining memberships in applicable industry
organizations,
all as are reasonably necessary for the operation of the Portfolios.
3. All books and records prepared and maintained by AIM for the Fund
under or in accordance with 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.
4. AIM shall provide accounting services described in paragraph 1
pursuant to a Master Administrative Services Agreement between AIM and the Fund.
Such agreement shall provide that AIM may receive such reasonable compensation
or may be reimbursed for its costs in providing the Services as is specified in
such Agreement. AIM may perform any of the other Services described in paragraph
1, and any person may perform any of the Services described in paragraph 2,
pursuant to separate written agreements with the Fund, which agreements shall
specify the payments to be made by the Fund for the Services provided.
5. AIM shall, at its own expense (but subject to the provisions of
paragraph 4), 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 Portfolios.
3
<PAGE> 4
6. AIM shall, at its own expense (but subject to the provisions of
paragraph 4), 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 perform its obligations under this Agreement.
7. The Fund will, from time to time, furnish or otherwise make
available to AIM such information relating to the business and affairs of the
Portfolios as AIM may reasonably require in order to discharge its duties and
obligations hereunder.
8. The Fund shall pay directly to each person (including AIM) who
provides Services to the Fund the amount of any fees accrued and expenses
incurred by such person agreed upon by such person and the Fund. Notwithstanding
the foregoing sentence and the provisions of paragraph 4,
a. AIM shall not receive any payment under or pursuant to this
Agreement for any Services that it provides under the Investment
Advisory Agreement, and
b. AIM shall reduce its fees or reimburse expenses for any
Portfolio to the extent necessary to ensure that the aggregate
fees and expense reimbursements paid to all persons who provide
Services to such Portfolio do not exceed, on an annual basis, for
such Portfolio, 0.45% of the average daily net assets of the
Portfolio. In determining the aggregate fees and expenses of a
Portfolio as a percentage of its average daily net assets, the
Fund shall use the valuation methods for such Portfolio described
in the Portfolio's Prospectus and/or Statement of Additional
Information. During any period when the determination of a
Portfolio's net asset value is suspended by the directors of the
Fund, the net asset value of a share of that Portfolio as of the
last business day prior to suc suspension shall, for the purpose
of this paragraph 8, be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.
9. 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 by AIM to the Fund 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.
10. This Agreement shall continue in effect until June 30, 2000, and
from year to year thereafter 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 Investment
Company 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
4
<PAGE> 5
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. this Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Investment Company 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.
11. 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 the applicable law 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.
5
<PAGE> 6
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/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
6
<PAGE> 1
EXHIBIT h(2)(b)
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM ADVISOR FUNDS, 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 INDEMNIFICATION ................................................ 4
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT ................... 5
ARTICLE 7 TERMINATION OF AGREEMENT ....................................... 6
ARTICLE 8 ADDITIONAL PORTFOLIOS .......................................... 6
ARTICLE 9 ASSIGNMENT ..................................................... 6
ARTICLE 10 AMENDMENT ...................................................... 7
ARTICLE 11 TEXAS LAW TO APPLY ............................................. 7
ARTICLE 12 MERGER OF AGREEMENT ............................................ 7
ARTICLE 13 COUNTERPARTS ................................................... 7
</TABLE>
<PAGE> 3
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of July, 1999, 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") and A I M Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC");
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; and
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;
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");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
1
<PAGE> 4
(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-10(e) a record of the total
number of Shares which are authorized, based upon data
provided to it by the Fund, and issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph (a),
the Transfer Agent shall 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,
the Fund 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 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
2
<PAGE> 5
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the Transfer Agent
at the request or with the consent of the Fund, will be reimbursed by the Fund
on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of 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
the Fund 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.
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.
3
<PAGE> 6
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
INDEMNIFICATION
5.01 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;
(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.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Transfer Agent as result of the Transfer Agent's lack
of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the 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
4
<PAGE> 7
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided to the
Transfer Agent or its agents or subcontractors by machine readable input, telex,
CRT data entry or other similar means authorized by the Fund, and shall not be
held to have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund.
5.04 In the event either 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.
5.05 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.
5.06 In order that the indemnification provisions contained in this
Article 5 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.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 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.
6.02 The Transfer Agent shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Transfer Agent agrees that all such records
prepared or maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the
5
<PAGE> 8
negotiation or the carrying out of this Agreement shall remain confidential, and
shall not be voluntarily disclosed to any other person, except as may be
required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either the Fund or the
Transfer Agent upon sixty (60) days written notice to the other.
7.02 Should the Fund exercise its right to terminate this Agreement,
all out-of-pocket expenses associated with the movement of records and material
will be borne by the Fund on behalf of the applicable 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.
ARTICLE 8
ADDITIONAL PORTFOLIOS
8.01 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 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by any party without the
written consent of the other parties.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
6
<PAGE> 9
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement
executed by all parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
AIM 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/ LISA A. MOSS
- -----------------------------------
Assistant Secretary
8
<PAGE> 11
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $.70 per shareholder
account that is closed during any monthly period. Both fees shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all such accounts.
<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 the AIM Funds with an annualized credit
to the monthly billings of (a) $1.50 for each open account in excess of
100,000 open AIM Funds Accounts up to and including 125,000 open AIM Funds
Accounts; (b) $1.75 for each open account in excess of 125,000 open Funds
Accounts up to and including 150,000 open AIM Funds Accounts; (c) $2.00
for each open AIM Funds Account in excess of 150,000 open AIM Funds
Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25
for each open AIM Funds Accounts in excess of 200,000 open AIM Funds
Accounts up to and including 500,000 open AIM Funds Accounts; (e) $2.50
for each open AIM Funds Account in excess of 500,000 open AIM Funds
Accounts up to and including 1,000,000 open AIM Funds Accounts; and (f)
$3.00 for each open AIM Funds Account in excess of 1,000,000 open AIM
Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of the
Remote Services Fee pursuant to the Remote Services Agreement with First
Data Investor Services Group, Inc. (formerly, The Shareholder Services
Group, Inc.), and on each subsequent anniversary date, the pert account
fees shall each 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, though in no
event shall such increase be greater than a 7% increase over the previous
fees.
4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year (paid by
investor per tax I.D. number).
Balance Credit The total fees due to the
Transfer Agent from all funds
affiliated with the Fund shall be
reduced by an amount equal to one half
of investment income earned by the
Transfer Agent on the DDA balances of
the disbursement accounts for those
funds.
Remote Services Fee The annualized fee per shareholder
account payable monthly is:
- $3.60/per open account for the
first 1.5 million open accounts
9
<PAGE> 12
- $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
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation, certificates,
envelopes, checks, stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, 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.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that such
expenses are not otherwise properly borne by the Transfer Agent as part of
its duties and obligations under the Agreement.
10
<PAGE> 1
EXHIBIT (h)(3)(i)
AMENDMENT NO. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNET(TM) SERVICES
THIS AMENDMENT, dated as of the 30th day of August, 1999 is made to the
Remote Access and Related Services Agreement dated as of December 23, 1994, as
amended (the "Agreement") between each registered investment company listed on
Exhibit 1 of the Agreement (the "Fund") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial
Planners to conduct certain account transactions through the use of the
Internet and Investor Services Group desires to allow such access and provide
certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of
the date first referenced above, Investor Services Group Agreement shall be
amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same
meanings as ascribed them in the Agreement. In addition, the following
definitions are hereby incorporated into Agreement:
(a) "End-User" shall mean any Shareholder or Financial Planner that
accesses the Investor Services Group recordkeeping system via
IMPRESSNet--Registered Trademark--.
(b) "Financial Planner" shall mean any investment advisor,
broker-dealer, financial planner or any other person authorized to act
on behalf of a Shareholder.
(c) "Financial Transaction" shall mean purchase, redemption, exchange
or any other transaction involving the movement of Shares initiated by
an End-User.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
(e) "IMPRESSNet--Registered Trademark--" shall mean the Investor
Services Group proprietary system consisting of the Investor Services
Group Secure Net Gateway and the Investor Services Group Web
Transaction Engine and shall also be deemed to be part of, and
included within the definition of "FDISG System" and "FDISG
Facilities", as those terms are defined in the Agreement.
(f) "Investor Services Group Secure Net Gateway" shall mean the system
of computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet.
<PAGE> 2
(g) "Investor Services Group Web Transaction Engine" shall mean the
system of computer hardware and software created and established by
Investor Services Group in order to enable Shareholders of the Fund to
perform the transactions contemplated hereunder.
(h) "Internet" shall mean the communications network comprised of
multiple communications networks linking education, government,
industrial and private computer networks.
(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of a Fund
as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares of the Fund.
2. Responsibilities of Investor Services Group. In addition to the
services rendered by Investor Services Group as set forth in the
Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of
IMPRESSNet--Registered Trademark-- Fees attached hereto as Schedule A
of this Amendment:
(a) In accordance with the written IMPRESSNet--Registered Trademark--
procedures and product functionality documentation provided to the
Fund by Investor Services Group, Investor Services Group shall,
through the use of the Investor Services Group Web Transaction Engine
and Secure Net Gateway enable End-Users to utilize the Internet to
access the Investor Services Group System in order to perform
transactions in Shareholder accounts. IMPRESSNet--Registered
Trademark-- shall be accessible by End-Users in order to perform
transactions in Shareholder accounts via the Internet at least 95% of
the time during any 24 hour period, excluding a) the standard Initial
Program Loads (IPL) which shall be scheduled from 9:00 p.m. Saturday
through 7:00 a.m. Sunday Central Time, and b) the software change
windows which shall be scheduled from 12:00 a.m. Friday through 4:00
a.m. Friday Central Time and 12:00 a.m. Monday through 4:00 a.m.
Monday Central Time.
(b) (i) With respect to Shareholders, process the set up of personal
identification numbers ("PIN") which shall include verification of
initial identification numbers issued, reset and activate personalized
PIN's and reissue new PIN's in connection with lost PIN's; and (ii)
with respect to Financial Planners process the set up of digital
certificates which shall include verification of initial digital
certificates issued, reset and activate digital certificates and
reissue digital certificates in connection with expired or terminated
certificates.
(c) Installation services which shall include, review and sign off on
the Fund's network requirements, recommending method of linking to the
FDISG Web Transaction Engine, installing network hardware and
software, implementing the network connectivity, and testing the
network connectivity and performance;
2
<PAGE> 3
(d) Maintenance and support of the Investor Services Group Secure Net
Gateway and the Investor Services Group Web Transaction Engine, which
includes the following:
(i) error corrections, minor enhancements and interim upgrades to
IMPRESSNet--Registered Trademark-- which are made generally
available by FDISG to IMPRESSNet--Registered Trademark--
customers;
(ii) help desk support to provide assistance to Fund employees
with the Fund's use of IMPRESSNet--Registered Trademark--.
Maintenance and support shall not include (i) access to or use of any
substantial added functionality, new interfaces, new architecture, new
platforms, new versions or major development efforts, unless made
generally available by FDISG to IMPRESSNet--Registered Trademark--
clients, as determined solely by FDISG; or (ii) development of
customized features.
(e) Maintenance and upkeep of the security infrastructure and
capabilities described in the procedures and product functionality
documentation.
(f) Prepare and forward monthly usage reports to the Fund which shall
provide the Fund with a summary of activity and functionality used by
End-Users. In addition, the Fund will be provided web-site access for
determination of daily usage activity.
3. Responsibility of the Fund. In connection with the services provided
by Investor Services Group hereunder, the Fund shall be responsible
for the following:
(a) establishment and maintenance of the Fund Home Page on the
Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable End-Users to access the Fund Home
Page and/or the Investor Services System via the Internet;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder.
4 Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software paid for by the Fund. Such exclusivity would
extend for a period of nine (9) months from the date the enhancement
is placed into the production libraries. Software exclusivity would be
waived if the Fund accepts either of the following conditions:
a). If prior to implementation, Investor Services Group or other
Investor Services Group clients agree to share in the expense of
the enhancements.
b). At any time during the 9 months following implementation, Investor
Services Group or other Investor Services Group clients agree to
share the expense for the enhancements.
3
<PAGE> 4
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes
all prior and contemporaneous agreements between the parties in connection with
the subject matter hereof. No officer, employee, servant or other agent of
either party is authorized to make any representation, warranty, or other
promises not expressly contained herein with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective FIRST DATA INVESTOR SERVICES
Portfolios and Classes set forth in GROUP, INC.
Exhibit 1 of the Agreement which may
be amended from time to time.
<TABLE>
<S> <C>
By: /s/ROBERT H. GRAHAM By: /s/DEBRLEE G. GOLDBERG
-------------------------------- -------------------------------
Name: Robert H. Graham Name: Debrlee G. Goldberg
------------------------------- ----------------------------
Title: President Title: SVP
------------------------------ ---------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE A
IMPRESSNET(TM) Fees
WEB TRANSACTION ENGINE
SET UP FEE: $150.00 PER HOUR
o Reviewing client network requirements and signing off on the
requirements
o Recommending method of linking to the Web Transaction Engine
o Installing the network hardware and software
o Implementing the network connectivity
o Testing the network connectivity and performance
FINANCIAL TRANSACTION COST:
<TABLE>
<CAPTION>
NUMBER OF TRANSACTIONS PER MONTH FEE PER TRANSACTION
-------------------------------- -------------------
<S> <C>
0-10,000 $.50
10,001-20,000 $.40
20,001+ $.25
</TABLE>
SOFTWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Releases of new versions of Web Transaction Engine (does not include
customization)
o Maintain security infrastructure with auditing function for the
purpose of Fund and Shareholder protection
o Monthly Usage Reports and web access as described in Paragraph 2(f) of
this Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in
Exhibit 1)
HARDWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Does not include client hardware and software requirements.
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance
agreements
The Software Maintenance Fee and Hardware Maintenance Fee shall remain
unchanged until December 31, 2002. During each one year term of the agreement
after December 31, 2002, the Software Maintenance Fee and Hardware Maintenance
Fee may be changed no more than 5% than the then-current Software Maintenance
Fee and Hardware Maintenance Fee upon 90 days' prior written notice to the
Funds. Such change to the Software Maintenance Fee and Hardware Maintenance Fee
shall be effective at the beginning of the next one year term of the Agreement.
5
<PAGE> 6
CUSTOMIZED DEVELOPMENT: $150 PER HOUR
The above referenced fees do not include fees associated with third party
software products which may be required to utilize future releases of
IMPRESSNet(TM) .
6
<PAGE> 7
EXHIBIT 1 OF SCHEDULE A
IMPRESSNET HELP DESK AND ESCALATION PROCEDURES
This is directed to the IMPRESSNet staff as well as the customer base to ensure
a common understanding of the expectations surrounding help desk support.
It is assumed that each site has a front line of technical support which
filters out calls and determines that the issue is IMPRESSNet related and is
severe enough to justify immediate attention. It is requested that off-hour
calls be reserved for major production or data integrity issues.
Once an issue is determined to be IMPRESSNet related, the client representative
(either the user or a point of contact) should call the First Data Help Desk at
(508) 871-8550.
The Help Desk has a list of primary and secondary developers on call by
product. It is advantageous to provide a clear and concise problem statement to
the Help Desk personnel along with a telephone number and point of contact. The
caller should be sure to obtain a ticket number to facilitate progress tracking
if necessary.
o The Help Desk will call and/or page the primary on-call developer and
allow 15 minutes for a return call.
o If no response is received, the Help Desk will call and/or page the
secondary on call and wait 10 minutes for a return call.
o If no response is received, the manager on call will be called and/or
paged.
o If no response is received, the Help Desk personnel will contact the
Vice President of Corporate Systems and then the Manager of the
Environmental Support Group.
o Finally, if no response is received the Help Desk personnel has access
to SCONCALL (special procedures utilized by help desk personnel)
Once the developer or manager is assigned the call, they are responsible for
seeing that the issue is satisfactorily addressed. They are not necessarily
responsible for physically addressing the issue.
The assigned person will contact the designated client personnel to inform them
the issue is being addressed and to collect any relevant information.
If an issue will take more than an hour to resolve, the assigned person will
periodically update the Help Desk with a progress status.
Once the issue has been addressed it is the responsibility of the assigned
person to notify the Help Desk that the issue can be marked as "resolved".
7
<PAGE> 8
The Help Desk will contact the client to obtain confirmation of resolution
prior to closing the ticket.
If there has been a lack of response on a particular issue after the specified
time period, please contact your Client Service or IMPRESSNet Manager.
8
<PAGE> 1
EXHIBIT h(4)(a)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 3rd day of May,
1999 between AIM Advisor Funds, Inc. (the "Company"), on behalf of the funds
listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M
Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and AIM agree as follows:
The Company and AIM agree until the date set forth on the attached
Exhibit "A" that AIM will waive its operating services fees at the rates set
forth on Exhibit "A" of the average daily net assets allocable to such class.
Neither the Company nor AIM may remove or amend the waivers to the Company's
detriment prior to the date set forth on Exhibit "A." AIM will not have any
right to reimbursement of any amount so waived.
The Company and AIM agree to review the then-current operating services
fee waivers for each class of each Fund listed on Exhibit "A" on a date prior to
the date listed on that Exhibit to determine whether such waivers should be
amended, continued or terminated. Unless the Company, by vote of its Board of
Directors, or AIM terminates the waivers, or the Company and AIM are unable to
reach an agreement on the amount of the waivers to which the Company and AIM
desire to be bound, the waivers will continue for additional one-year terms at
the rate to which the Company and AIM mutually agree. Exhibit "A" will be
amended to reflect that rate and the new date through which the Company and AIM
agree to be bound.
IN WITNESS WHEREOF, the Company and AIM have entered into this
Memorandum of Agreement as of the date first above written.
AIM Advisor Funds, Inc.,
on behalf of each Fund listed in Exhibit "A"
to this Memorandum of Agreement
By: /s/ ROBERT H. GRAHAM
-----------------------------------------
Title: President
--------------------------------------
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
-----------------------------------------
Title: President
--------------------------------------
<PAGE> 2
EXHIBIT "A"
-----------
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
FUND FEE WAIVER COMMITTED UNTIL
- ---- ---------- ---------------
<S> <C> <C>
AIM Advisor Flex Fund
Class A 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
Class B 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
Class C 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
AIM Advisor International
Value Fund
Class A 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
Class B 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
Class C 0.35% of operating service fees on average net June 30,1999
assets in excess of $50 million
AIM Advisor Large Cap
Value Fund 0.35% of operating service fees on average net June 30, 1999
Class A assets in excess of $50 million
0.35% of operating service fees on average net June 30, 1999
Class B assets in excess of $50 million
0.35% of operating service fees on average net June 30, 1999
Class C assets in excess of $50 million
AIM Advisor MultiFlex Fund
Class A 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
Class B 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
Class C 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
AIM Advisor Real Estate
Fund
Class A 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
Class B 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
Class C 0.35% of operating service fees on average net June 30, 1999
assets in excess of $50 million
</TABLE>
<PAGE> 1
EXHIBIT h(4)(b)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 3rd day of May,
1999 between AIM Advisor Funds, Inc. (the "Company"), on behalf of the funds
listed on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M
Distributors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and AIM agree as follows:
The Company and AIM agree until the date set forth on the attached
Exhibit "A", that AIM will waive Rule 12b-1 distribution plan payments at the
rates set forth on Exhibit "A" of the average daily net assets allocable to such
class. Neither the Company nor AIM may remove or amend the waivers to the
Company's detriment prior to the date set forth on Exhibit "A." AIM will not
have any right to reimbursement of any amount so waived.
The Company and AIM agree to review the then-current waivers for each
class of each Fund listed on Exhibit "A" on a date prior to the date listed on
that Exhibit to determine whether such waivers should be amended, continued or
terminated. Unless the Company, by vote of its Board of Directors, or AIM
terminates the waivers, or the Company and AIM are unable to reach an agreement
on the amount of the waivers to which the Company and AIM desire to be bound,
the waivers will continue for additional one-year terms at the rate to which the
Company and AIM mutually agree. Exhibit "A" will be amended to reflect that rate
and the new date through which the Company and AIM agree to be bound.
IN WITNESS WHEREOF, the Company and AIM have entered into this
Memorandum of Agreement as of the date first above written.
AIM Advisor Funds, Inc.,
on behalf of each Fund listed in Exhibit "A"
to this Memorandum of Agreement
By: /s/ ROBERT H. GRAHAM
-----------------------------------------
Title: President
--------------------------------------
A I M Distributors, Inc.
By: /s/ MICHAEL J. CEMO
-----------------------------------------
Title: President
--------------------------------------
<PAGE> 2
EXHIBIT "A"
-----------
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
FUND FEE WAIVER COMMITTED UNTIL
- ---- ---------- ---------------
<S> <C> <C>
AIM Advisor Flex Fund
Class A 0.10% of Rule 12b-1 distribution plan August 4, 2000
payments on average net assets
AIM Advisor International
Value Fund
Class A 0.10% of Rule 12b-1 distribution plan August 4, 2000
payments on average net assets
AIM Advisor Large Cap
Value Fund
Class A 0.10% of Rule 12b-1 distribution plan August 4, 2000
of payments on average net assets
AIM Advisor Multiflex Fund
Class A 0.10% of Rule 12b-1 distribution plan August 4, 2000
payments on average net assets
AIM Advisor Real Estate
Fund
Class A 0.10% of Rule 12b-1 distribution plan August 4, 2000
payments on average net assets
</TABLE>
<PAGE> 1
Exhibit j(1)
CONSENT OF COUNSEL
AIM ADVISOR FUNDS, INC.
-----------------------
We hereby consent to the use of our name and to the reference
to our firm under the caption "Miscellaneous Information - Legal Matters" in
the Statement of Additional Information for AIM Advisor Flex Fund, AIM Advisor
International Value Fund, AIM Advisor Large Cap Value Fund and AIM Advisor Real
Estate Fund, which is included in Post-Effective Amendment No. 37 to the
Registration Statement under the Securities Act of 1933, as amended
(No. 2-87377), and Amendment No. 38 to the Registration Statement under the
Investment Company Act of 1940, as amended (No. 811-3886), on Form N-1A of AIM
Advisor Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
April 18, 2000
<PAGE> 1
Exhibit j(2)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors and Shareholders
AIM Advisor Funds, Inc.:
We consent to the use of our reports on AIM Advisor Flex Fund, AIM Advisor
International Value Fund, AIM Advisor Large Cap Value Fund, and AIM Advisor
Real Estate Fund (portfolios of AIM Advisor Funds, Inc.) dated February 4, 2000
included herein and the references to our firm under the headings "Financial
Highlights" in the Prospectuses and "Audit Reports" in the Statement of
Additional Information.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
April 24, 2000
<PAGE> 1
EXHIBIT m(2)(b)
AMENDMENT NO. 1
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
This Amendment dated as of March 2, 1998, amends the Plan and Agreement
of Distribution Pursuant to Rule 12b-1 (the "Agreement"), dated August 4, 1997,
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").
The second WHEREAS clause of the Agreement is hereby deleted in its
entirety and replaced with the following:
"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
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"
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ STEPHEN I. WINER 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
<PAGE> 1
EXHIBIT m(2)(c)
AMENDMENT NO. 2
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12B-1
This Amendment dated as of June 21, 1999, amends the Plan and Agreement
of Distribution Pursuant to Rule 12b-1 (the "Agreement"), dated August 4, 1997,
as amended as of March 2, 1998, 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").
The second WHEREAS clause of the Agreement is hereby deleted in its
entirety and replaced with the following:
"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
Flex 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"
Section 4a and 4b are deleted in their entirety and replaced with the
following paragraphs;
"4a. With respect to its Class A shares, each 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. 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 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. 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."
<PAGE> 2
In all other respects, the Agreement is hereby confirmed and remains in full
force and effect.
AIM ADVISOR FUNDS, INC.
ATTEST: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ----------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
ATTEST: /s/ LISA A. MOSS By: /s/ MICHAEL J. CEMO
------------------------------ ----------------------------------
Assistant Secretary President
2
<PAGE> 1
EXHIBIT m(3)(b)
AMENDMENT NO. 1
MASTER DISTRIBUTION PLAN
OF
AIM ADVISOR FUNDS, INC.
(CLASS B SHARES)
The Master Distribution Plan (the "Plan"), dated as of March 3, 1998,
pursuant to Rule 12b-1 of AIM Advisor Funds, Inc., a Maryland corporation, is
hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced
with the following:
"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 Real Estate Fund 0.75% 0.25% 1.00%
(Class B Shares)"
</TABLE>
In all other respects, the Plan is hereby confirmed and remains in full
force and effect
Dated: June 21, 1999
AIM ADVISOR FUNDS, INC.
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
----------------------------- ---------------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT n(1)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED FEBRUARY 24, 2000)
WHEREAS, the members of the AIM Management Group are A I M Management Group
Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly
owned and indirect subsidiaries (individually and collectively referred to as
"AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal
underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to
each portfolio under management and the interests of the client accounts and of
the shareholders of AIM's investment company clients must take precedence over
the personal interests of the employees of AIM, thus requiring a rigid adherence
to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional
or inadvertent action is taken by an employee of AIM which is, or appears to be,
adverse to the interests of AIM or any of its client accounts, including the
defining of standards of behavior for such employees, while at the same time
avoiding unnecessary interference with the privacy or personal freedom of such
employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors
hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1
under the Investment Company Act of 1940 ("1940 Act"), with the intention that
certain provisions of the Code shall become applicable to the officers,
directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i) all
officers, directors and employees of AIM Advisors and its wholly owned
and indirect subsidiaries and (ii) officers, directors and employees
of AIM Management who
-1-
<PAGE> 2
have an active part in the management, portfolio selection,
underwriting or shareholder functions with respect to AIM's investment
company clients or provide one or more similar services for AIM's
non-investment company clients. The term "employee" does not include
directors of AIM Management who do not maintain an office at the home
office of AIM Management and who do not regularly obtain information
concerning the investment recommendations or decisions made by AIM on
behalf of client accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted employee
standards of conduct that provide equivalent protections to AIM's
client accounts. In performing sub-advisory services, such person or
entity will be subject to the direction and supervision of AIM, and
subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of
Ethics Committee ("Committee"). The Committee shall have the
responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of the
provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor personal
investment activity by "Covered Persons" (as defined in the Procedures
adopted hereunder), both before and after any trade occurs and to
prepare periodic and annual reports, conduct education seminars and
obtain employee certifications as deemed appropriate. In the event of
a finding that a violation has occurred requiring significant remedial
action, the Committee shall take such action as it deems appropriate
on the imposition of sanctions or initiation of disgorgement
proceedings. The Committee shall also make recommendations and submit
reports to the Boards of Directors/Trustees of AIM's investment
company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a
statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to
report to the Boards of Directors/Trustees of its investment
company client account(s) as to such sub-advisor's adherence to
the Boards' policies and controls referenced in Section I.B.
above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the
intent of the Code. Among other things, the Procedures require certain new
employees to complete an Asset Disclosure Form, a Brokerage Accounts
Listing Form and such other forms as deemed appropriate by the Committee.
Such Procedures are hereby incorporated into the Code and are made a part
of the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
-2-
<PAGE> 3
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply
strictly with all applicable federal and state laws and all rules and
regulations of any governmental agency or self-regulatory organization
governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's
prohibition against insider trading. Trading on or communicating
material non-public information, or "inside information", of any sort,
whether obtained in the course of research activities, through a
client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal and
state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly participate
in, assist, or condone any act in violation of any statute or
regulation governing AIM or any act that would violate any provision
of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply
with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control, with
a view to preventing any violation by such persons of applicable
statutes or regulations, AIM's corporate procedures, or the provisions
of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable
statutes, regulations or provisions of the Code or of any Procedures
adopted hereunder has occurred shall immediately report such evidence
to the Chief Compliance Officer of AIM. Such action by the employee
will remain confidential, unless the employee waives confidentiality
or federal or state authorities compel disclosure. Failure to report
such evidence may result in disciplinary proceedings and may include
sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an actual or
potential conflict of interest with AIM or its client accounts, or
which may be otherwise detrimental to the interests of the members of
AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client account
of an investment opportunity in order to personally benefit from that
opportunity.
- -----------------
(1)Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate" of
such individual, as such term is defined in the 1940 Act. Such conflict may also
arise from the purchase or sale for a client account of securities in which an
officer, director or employee of AIM has an economic interest. Moreover, such
conflict may arise in connection with vendor relationships in which such
employee has any direct or indirect financial interest, family interests or
other personal interest. To the extent of conflicts of interest between AIM and
a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to AIM. In any such case, potential or actual conflicts must be
disclosed to AIM and the first preference and priority must be to avoid such
conflicts of interest wherever possible and, where they unavoidably occur, to
resolve them in a manner that is not disadvantageous to a client.
-3-
<PAGE> 4
C. Without the knowledge and approval of the Chief Executive Officer of
AIM Management, employees shall not engage in a business activity or
practice for compensation in competition with the members of AIM. Each
employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of AIM
Management's Chief Executive Officer to participate on a board of
directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to
raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is
authorized, investment personnel serving as directors shall be
isolated from those making investment decisions through AIM's "Chinese
Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any
investment action, shall exercise diligence and thoroughness, and
shall have a reasonable and adequate basis for any such recommendation
or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed or
investment action to be taken by the members of AIM for its client
accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment recommendation
made or to be made, or of any investment action taken or to be taken
by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a
client account's portfolio or transactions or to the investment
recommendations of AIM, nor shall any employee disclose any non-public
information relating to the business or operations of the members of
AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or its
client accounts, any gifts, gratuities or other things of more than de
minimis value or significance that their acceptance might reasonably
be expected to interfere with or influence the exercise of independent
and objective judgment in carrying out such person's duties or
otherwise gives the appearance of a possible impropriety. For this
purpose, gifts, gratuities and other things of value shall not include
unsolicited entertainment so long as such unsolicited entertainment is
not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM
shall not acquire securities for an account for which he/she has a
direct or indirect beneficial interest in an initial public offering
("IPO") or on behalf of any person, entity or organization that is not
an AIM client. All other employees shall not acquire securities for an
account for which he/she has a direct or indirect beneficial interest
offered in an IPO or on behalf of any person, entity or organization
that is not an AIM client account except in those circumstances where
different amounts of such offerings are specified for different
investor types (e.g., private investors and institutional investors)
and such transaction has been pre-cleared by the Compliance Office.
-4-
<PAGE> 5
J. All personal securities transactions by employees must be conducted
consistent with this Code and the Procedures adopted hereunder, and in
such a manner as to avoid any actual or potential conflicts of
interest or any abuse of such employee's position of trust and
responsibility. Unless an exemption is available, employees who are
deemed to be "Covered Persons" as defined in the Procedures adopted
hereunder, shall pre-clear all personal securities transactions in
securities in accordance with the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, (or registered representative and/or
principal of AIM), shall refrain from engaging in personal securities
transactions in connection with a security that is not registered
under Section 12 of the Securities Act of 1933 (i.e., a private
placement security) unless such transaction has been pre-approved by
the Chief Compliance Officer or the Director of Investments (or their
designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the
Procedures adopted hereunder, may not engage in a transaction in
connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client trades
in that same (or equivalent) security unless the de minimis exemption
is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, may not purchase and voluntarily
sell, or sell and voluntarily purchase the same (or equivalent)
securities of the same issuer within 60 calendar days unless such
employee complies with the disgorgement procedures adopted by the Code
of Ethics Committee. Subject to certain limited exceptions set forth
in the related Procedures, any transaction under this provision may
result in disgorgement proceedings for any profits received in
connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted
hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions; a
letter of admonition, education or formal censure; fines, suspension,
re-assignment, demotion or termination of employment; or other significant
remedial action. Employees may also be subject to disgorgement proceedings
for transactions in securities that are inconsistent with Sections V.L. and
V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common sense)
and good business judgment also apply. Every person subject to this Code
should read and understand these documents thoroughly. They present
important rules of conduct and operating controls for all employees.
Employees are also expected to present questions to the attention of their
supervisors and to the Chief Compliance Officer (or designee) and to report
suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group
by: /s/ CHARLES T. BAUER
------------------------------------
Charles T. Bauer
February 24, 2000
------------------------------------
Date
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EXHIBIT n(2)
CODE OF ETHICS
OF
AIM ADVISOR FUNDS, INC.
WHEREAS, AIM Advisor Funds, Inc. (the "Company") is a registered
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a
Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code, effective
as of the 4th day of August, 1997.
I. DEFINITIONS
For the purpose of the Code the following terms shall have the
meanings set forth below:
A. "ACCESS PERSON" means any trustee, officer, or advisory person
of the Company; provided, however, that any person who is an
access person of any investment advisor of, or principal
underwriter for, any registered investment company and who is
required by Rule 17j-1 of the 1940 Act to report his or her
securities transactions to such investment advisor or principal
underwriter, shall not be deemed an access person of the
Company.
B. "ADVISORY PERSON" means
1. any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship
with the Company, its investment advisor or administrator,
as defined in Section I.D. hereof), who, in connection
with his or her regular functions or duties, makes,
participates in, or obtains information (other than
publicly available information) regarding the purchase or
sale of a security by the Company, or whose functions
relate to the making of any recommendations with respect
to such purchases or sales; and
2. any natural person directly or indirectly owning,
controlling, or holding with power to vote, 25% or more of
the outstanding voting securities of any of the Company,
its investment advisor or administrator, who obtains
information (other than publicly available information)
concerning recommendations made by the Company, its
investment advisor or administrator with regard to the
purchase or sale of a security.
C. "AFFILIATED PERSONS" or "AFFILIATES" means
1. any employee or access person of the Company, and any
member of the immediate family (defined as spouse, child,
mother, father, brother, sister, in-law or any other
relative) of any such person who lives in the same
household as such person or who is financially dependent
upon such person;
2. any account for which any of the persons described in
Section I.C.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which
any such person either has the authority to make
investment decisions or from time to time give investment
advice; and
3. any partnership, corporation, joint venture, trust or
other entity in which any employee of the Company or
access person of the Company directly or indirectly, in
the aggregate, has
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<PAGE> 2
a 10% or more beneficial interest or for which any such
person is a general partner or an executive officer.
D. "CONTROL" means the power to exercise a controlling influence
over the management or policies of a corporation. Any person
who owns beneficially, either directly or through one or more
controlled corporations, more than 25% of the voting securities
of a corporation shall be presumed to control such corporation.
E. "SECURITY" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in
general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt of, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers'
acceptances, bank certificates of deposit, commercial paper and
shares of registered open-end investment companies.
F. "PURCHASE OR SALE OF A SECURITY" includes the writing of an
option to purchase or sell a security.
G. "SECURITY HELD OR TO BE ACQUIRED" by the Company means any
security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for
purchase by the Company.
H. "BENEFICIAL OWNERSHIP OF A SECURITY" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the same
home with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of
such person's immediate family have a vested
interest in the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the
power to revoke the trust without the consent of all
the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares
of the corporation) of which such person is an officer,
director or 10% stockholder;
6. any other person if, by reason of contract,
understanding, relationship, agreement or other
arrangement, such person obtains therefrom benefits
substantially equivalent to those of ownership; or
7. such person's spouse or minor children or any other
person, if, even though such person does not obtain
therefrom the above-mentioned benefits of ownership, such
person can vest or re-vest title in himself at once or at
some future time.
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<PAGE> 3
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares
voting power and/or investment power with respect to such
security. Voting power includes the power to vote, or to
direct the voting of such security, and investment power
includes the power to dispose, or to direct the disposition
of such security. A person is the beneficial owner of a
security if he has the right to acquire beneficial ownership
of such security at any time within sixty (60) days.
II. IDENTIFICATION OF ACCESS PERSONS
A. The Company will maintain a list of all access persons and
will notify each access person in writing that such person is
an access person. Once a person has been so identified, he/she
shall continue to be an access person until otherwise notified
in writing by the Company; provided, however, if such person
is an access person solely because he/she is a trustee of the
Company, such person shall cease to be an access person at the
time such person ceases to be a trustee.
B. Each access person will be given a copy of the Code at the
time such person becomes an access person.
III. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each access person shall comply strictly with all applicable
federal and state laws and all rules and regulations of any
governmental agency or self-regulatory organization governing
his or her activities.
B. Each access person shall comply strictly with procedures
established by the Company to ensure compliance with
applicable federal and state laws and regulations of
governmental agencies and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation
governing securities matters, nor any act that would violate
any provision of this Code or any rules adopted thereunder.
IV. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the Company's portfolio and research
and studies activities is confidential until publicly
available. Whenever statistical information or research is
supplied to or requested by the Company, such information must
not be disclosed to any persons other than as duly authorized
by the President or the Board of Trustees of the Company. If
the Company is considering a particular purchase or sale of a
security, this must not be disclosed except to such duly
authorized persons.
B. If any access person should obtain information concerning the
Company's portfolio (including the consideration by the
Company of acquiring or recommending any security for the
Company's portfolio), whether in the course of such person's
duties or otherwise, such person shall respect the
confidential nature of this information and shall not divulge
it to anyone unless it is properly part of such person's
services to the Company to do so or such person is
specifically authorized to do so by the President of the
Company.
V. ETHICAL STANDARDS
A. Access persons shall conduct themselves in a manner consistent
with the highest ethical standards. They shall avoid any
action, whether for personal profit or otherwise, that results
in an actual or potential conflict of interest, or the
appearance of a conflict of interest, with the Company or
which may be otherwise detrimental to the interests of the
Company.
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<PAGE> 4
B. Conflicts of interest generally result from a situation in
which an individual has personal interests in a matter that is
or may be competitive with his responsibilities to another
person or entity (such as the Company) or where an individual
has or may have competing obligations or responsibilities to
two or more persons or entities. In the case of the
relationship between the Company on the one hand, and its
employees and access persons and their respective affiliates on
the other hand, such conflicts may result from the purchase or
sale of securities for the account of the Company and for the
personal account of the individual involved or the account of
any affiliate of such person. Such conflict may also arise from
the purchase or sale for the account of the Company of
securities in which an access person or employee of the Company
(or an affiliate of such person) has an interest. In any such
case, potential or actual conflicts must be disclosed to the
Company, and the first preference and priority must be to avoid
such conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner not
disadvantageous to the Company.
VI. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No access person shall recommend to, or cause or attempt to
cause, the Company to acquire, dispose of, or hold any security
(including, any option, warrant or other right or interest
relating to such security) which such access person or an
affiliate of such access person has direct or indirect
beneficial ownership, unless the access person shall first
disclose to the Board of Trustees all facts reasonably
necessary to identify the nature of the ownership of such
access person or his or her affiliate in such security.
B. No access person or affiliate of such access person shall
engage in a purchase or sale of a security (including, any
option, warrant or other right or interest relating to such
security), other than on behalf of the Company, with respect to
any security, which, to the actual knowledge of such access
person at the time of such purchase or sale, is (i) being
considered for purchase or sale by the Company; or (ii) being
purchased or sold by the Company.
C. The prohibitions of Section VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or
control.
2. Purchases or sales which are non volitional on the part of
either the access person or the Company.
3. Purchases which are part of an automatic dividend
reinvestment plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired.
5. Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be
very unlikely to affect trading in or the market value of
the security, or because they clearly are not related
economically to the securities to be purchased, sold or
held by the Company.
D. If, in compliance with the limitations and procedures set forth
in this Section VI, any access person or an affiliate of such
person shall engage in a purchase or sale of a security held or
to be acquired by the Company, first preference and priority
must be given to any transactions that involve the Company, and
the Company must have the benefit of the best price obtainable
on acquisition and the best price obtainable on disposition of
such securities.
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<PAGE> 5
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Trustees in writing, setting forth with reasonable
specificity the nature of such fiduciary obligations and the
reasons why such access person believes such person is unable
to comply with any such provisions. The Board of Trustees may,
in its discretion, exempt such access person or an affiliate of
such person from any such provisions, if the Board of Trustees
shall determine that the services of such access person are
valuable to the Company and the failure to grant such exemption
is likely to cause such access person to be unable to render
services to the Company. Any access person granted an exemption
(including, an exception for an affiliate of such person)
pursuant to this Section VI.E. shall, within three business
days after engaging in a purchase or sale of a security held or
to be acquired by a client, furnish the Board of Trustees with
a written report concerning such transaction, setting forth the
information specified in Section VII.B. hereof.
VII. REPORTING PROCEDURES
A. Except as provided by Sections VII.C and VII.D. hereof, every
access person shall report to the Board of Trustees the
information described in Section VII.B. hereof with respect to
transactions in any security in which such access person has,
or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security (whether or not
such security is a security held or to be acquired by a
client); provided, however, that any such report may contain a
statement that the report shall not be construed as an
admission by the person making such report that he has any
direct or indirect beneficial ownership in the security to
which the report relates.
B. Every report required to be made pursuant to Section VII.A.
hereof shall be made not later than ten days after the end of
the calendar quarter in which the transaction to which the
report relates was effected and shall contain the following
information:
1. The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom
the transaction was effected.
C. Notwithstanding the provisions of Section VII.A. and VII.B.
hereof, no person shall be required to make a report with
respect to transactions effected for any account over which
such person does not have any direct or indirect influence or
control.
D. Notwithstanding the provisions of Section VII.A. and VII.B.
hereof, an access person who is not an "interested person" of
the Company within the meaning of Section 2(a)(19) of the 1940
Act, and who would be required to make a report solely by
reason of being a trustee of the Company, need only report a
transaction in a security if such trustee, at the time of the
transaction, knew or, in the ordinary course of fulfilling his
official duties as a trustee of the Company, should have known,
that, during the 15-day period immediately preceding or after
the date of the transaction by the trustee, such security is or
was purchased or sold, or considered by the Company or its
investment advisor for purchase or sale by the Company.
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<PAGE> 6
E. Every access person who beneficially owns, directly or
indirectly, 1/2% or more of the stock of any company the
securities of which are eligible for purchase by the Company
shall report such holdings to the Company.
VIII. REVIEW PROCEDURES
A. The reports submitted by access persons pursuant to Section
VII.B. hereof shall be reviewed at least quarterly by the Board
of Trustees or such other persons or committees as shall be
designated by the Board of Trustees, in order to monitor
compliance with this Code.
B. If it is determined by the Board of Trustees that a violation
of this Code has occurred and that the person violating this
Code has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as
the case may be, such security at the more advantageous price.
If this cannot be consummated, then the Board of Trustees shall
take such other course of action as it may deem appropriate.
With respect to any violation of this Code, the Board of
Trustees may take any preventive, remedial or other action that
it may deem appropriate. In determining whether or not there
has been, or may be, a conflict of interest between the Company
and any person subject to this Code, the Board of Trustees
shall consider all of the relevant facts and circumstances.
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EXHIBIT o(3)
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS--Registered Trademark--
1. This Third 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) AIM Cash Reserve Shares - shall mean the AIM Cash Reserve
Shares Class of AIM Money Market Fund, a Portfolio of AIM
Funds Group.
(c) CDSC - contingent deferred sales charge.
(d) CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC
upon redemption.
(e) Class - a class of Shares of a Fund representing an interest in
a Portfolio.
(f) Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents.
(g) Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
(h) Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents.
(i) Directors - the directors or trustees of a Fund.
(j) 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.
(k) Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
(l) Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
(m) Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
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(n) 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.
(o) Plan of Distribution - Any plan adopted under Rule 12b-1
under the Act with respect to payment of a Distribution
Fee and/or Service Fee.
(p) Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
(q) 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.
(r) Share - a share of common stock of or beneficial interest in a
Fund, as applicable.
3. Allocation of Income and Expenses.
(a) Distribution Fees 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.
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<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, which sales charge 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 Section 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.
(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.
(e) AIM Cash Reserve Shares. AIM Cash Reserve Shares shall be
(i) offered at net asset value and (ii) 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. AIM Cash Reserve Shares acquired through
exchange of Class A Shares of another Portfolio may 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.
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.
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<PAGE> 4
(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.
(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 on terms
disclosed in the Fund's prospectus or statement of
additional information and, for the Class A Shares and AIM
Cash Reserve 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 or AIM Cash Reserve Shares, 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) AIM Cash Reserve Shares may be exchanged for Class A
Shares, Class B Shares or Class C 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.
(e) 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.
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(f) CDSC Computation. The CDSC payable upon redemption of
Class A Shares, Class B Shares, Class C Shares and AIM
Cash Reserve 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.
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. Effective Date. 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. Amendments. 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.
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